Memorial of Nicaragua

NIEMORIALOFNICARAGUA

(COMPENSATION) INTRODUCTION

A. Prior Proceedingsin the Case

1. On 9 April 1984,Nicaragua filed its Application in the Court charging the
United States with military and paramilitary activities in and against Nicaragua
in violation of United States obligationsunder international law.The AppIication
asked the Court for a declaration that the United States activities wereunlawful,
an order to the United States to ceaseand desist. and compensation. ln addition,

Nicaragua requested that the Court indicate interim measures of protection
under Article 41 of the Statute.
2. In its Order of 10May 1984,followingoral observations on the request for
interim measuresofprotection,the Court indicated provisional measures pursuant
to Article 41 of the Statute of the Court.
3. In its Judgment of 26 November 1984,folfowingwritten and oral proceed-
ings on the preliminary issues of jurisdiction and admissibility, the Court held
that it had jurisdiction to entertain the Application on the basis of Article 36,
paragraphs 2 and 5, of the Statute of the Court, and also by virtue of the
compromissory clause in the Treaty of Friendship, Commerce and Navigation
between the United States and Nicaragua of 21 January 1956.The Court also
held that the Application was admissible.
4. The United States announced, on 18 January 1985, that it would not
"participate" further in this case. Thereafter, Nicaragua, pursuant to Article 53
of the Statute, called upon the Court to decide the case despite the failure of the

Respondent to appear and defend.
5. In its Judgmentof 27June 1986.the Court reachedthe followingconclusions;
- that by training, arming,equipping, financingand supplyingthe contraforces,
and otherwise encouraging, supporting and aiding military and paramilitary
activitiesin and against Nicaragua, the United States has acted in breach of
its obligationunder customaq international lawnot to intervene in the affairs

of another state (Dispositif, subpara. 3);
- that by certain specified attaçks on Nicaraguan territory in 1983-1984,and
further bythe actsof intervention referred to in the Dispositif,subparagraph 3,
which involvedthe use offorce, the United States has acted in breach of its
obligation under customary international law not to use forceagainst another
State (Dispositif, subpara. 4);
- that by directing or authorizing overflights ofNicaraguan territory, and by
the acts imputable to the United States referred to in the Dispositif, sub-
paragraph 4. the United States has acted in breach of its obligation under
customary international law not to violate the sovereignty of another State
(Dispositif. subpara. 5);
- that by laying mines in the interna1 or territorial waters of Nicaragua, the
United States has acted in breach of its obligations not to use force against
another State, not to intervene in its afkdirs,not to violate its sovereignty,
and not to interrupt peaceful maritine commerce (Dispositif, subpara. 6),
and afso in breach of its obligations under Article XIX of the Treaty of

Friendship, Commerce and Navigation of 21 January 1956 between the
United States and Nicaragua (Dispositif, subpara. 71; do so. It has assembled both the figures reflecting its human casualties and
extensive economic data showing the injury sustained by its economy as a result
of the unlawful conduct of the United States. The data is summarized in this
Memorial, and presented in full in the Annexes attached hereto. The Annexes
also contain explanations of the methodologies employed in the colleçtion of the
evidence and the calculations made to arrive at the total amounts Nicaragua

claims due from the United States. The methodologies have been developed
and applied by experienced economists, and the results, in large part, have been
corroborated by the findings of impartial international organizntions suçh as the
Economic Commission for Latin America and the Caribbean (ECLAC), a body
of the Economic and Social Council of the United Nations.
13. This Mernorial is organized as follows. At the outset, the general legal
principles governing reparation for unlawful acts are set forth in Chapter 1.
Chapter 2 follows with a discussion of the specific legalprinciples relevant to the
loss caused by the military and paramilitary activities, including the mode of
compensation for deaths and personal injuries, and for material damage to
property and the immediate production losses caused by such property damage.
This chapter surnmarizes the evidence of the loss sustained by Nicaragua as a
result of the military and paramilitary activities, and the methodology by which
the evidence was collected.
14. Chapter 3sets forth the principles of specificrelevance to the loss sustained
by Nicaragua from the attacks by the United States specified in paragraphs
81-85of the Judgment on the Merits (and Dispositif?subpara. 4), and the mining
of Nicaragwa's harbours. The evidence of these losses and the methodology by
which they were determined are then summarized.
15. ln Chapter 4, Nicaragua presents its çlüim for defence and security çosts

it has incurred in order to defend itself and its citizens against the unlawful
activities of the United States.
16. Chapter 5 presents an overview of the particular characteristics of the
Nicaraguan economy relevant to understanding the impact of United States
economic aggression on it. It then discussethe principles relevant to determining
the losses caused bythe United States general embargo on trade with Nicaragua.
This discussion is followed by a summary of the losses Nicaragua hüs suffered
as a result of the embargo, such as losses in net export income, increased costs
of imports: and consequent production losses.
17. Chapter 6 concerns the additional loss caused to Nicaragua's development
potential. The general rules applicable to determining these rnacroeconomic
losses are set forth, followed by a discussion of the evidence of these losses and
the methods by which they have been determined.
18. Nicaragua's claim for reparation also includes a claim for pecuniary
satisfaction for the violations of its sovereignty that, according to the Judgment
on the Merits. constituted separüte and independent violations of interrationiil
Iriw.Chapter 7 discusses the relevant legal principles, and the pecuniary satisfac-
tion to which Nicaragua maintains it is entitled for violations of its sovereignty.
19. Nicaragua also claims compensation for morat damage, in light of the scale,
seriousness and persistence ofthe United States breaches of international law. the

deliberateand intentional natureof thisunlawfulconduct, and the resultinghardships
iinposed on the Nicaraguan people. Chapter 8 sets forth the bases for this claim.
20. The temporal scope of the claims of Nicaragua is examined in Chapter 9.
21. Finally. the concluding chapter covers procedural issues relating to the
non-appearance of the Respondent, the question of interest on the reparation
award, and connected matters. Nicaragua's Submissions on Compensation are
then presented. CHAPTER 1

THE LECALPRINCIPLESGOVERNINGREPARATIONFOR
UNLAWFULACTS

Introduction

22. The operation of assessingcompensation for the deaths, injuries, material
damage and consequential economic loss caused by the unlawful activities of the
United States in and iigainst Nicaragua involves an inquiry in several stages. In
this chapter expression is givento the principles governing the general approach
to the assessment of compensation. In the two chapters which follow the impli-
cations of the third and fourth subparagraphs of the Dispositif are examined.
Chapter 2 will also provide an exposition of the particularmodes according to
which compensation for deaths, injuries and material damage are to be assessed.

A. TheGeneral Principleof State Responsibility

23. The starting point must be the principle that responsibili~. attaches to
every internationally wrongful act of the State. The position was stated authorita-
tively by Judge Ago in the text of his Third Report as Special Rapporteur to the
International Law Commission :

"One of the principles most deeply rooted in the doctrine of international
law and most strongly upheld by State practice and judicial decisions is the
principle that any conduct of a State which international liiw classifiesas a
wrongful act entails the responsibility ofthat State in international law. In
other words, whenever a State is guilty of an internationally wrongful act
against another State, international responsibility is established 'immediately
as between the two States', as wris held by the Permanent Court of
International Justice in the Phosphates in Morocco case. (Pl~osphatesin
Morucco, Judgment, 1938, P.C.I.J., Stries AIB, No. 74, p. 28.) Moreover, as
stated by the ttalian-United States Conciliation Commission set up under
Article 83 of the Treaty of Peace of 10 February 1947 (United Nations,
Treaty Suries,Vol.49, p. 1671,no Striteinay 'escapethe responsibility.arising
out of the exercise of an illicit action from the viewpoint of the general
pRnciples of international law' (Annstrnn,yCork Coinpun,~case, 22 Oçtober
1953, United Nations, Reports of Internationrr/Arbitral A~~surds V,ol. XIV
(United Nations publication, Sales No. 65.V.4, p. 163))." (Yeurbnnk of the

Internalionu/Luit'Cummi.s.sion1,971.11(Part One), p. 199,at p. 205,para. 30.)
24. Indeed, the principal sources invariably state the general principle that the
commission of an act either contrary to customary international law or in breach
of treüty obligations gives rise to responsibility for the damage and loss of life
resiilting from the illegal conduct. A statement and application of the principle
is to be found in the Judgment of this Court in the Corfu Chunnrlcase (Merits).
I.C.J. Rej~orts1949, page 4 at page 23 :

"The Court therefore reaches the conclusion that Albania is responsible
under international Iaw for the explosions which occurred on October 22nd. 1946, in Albanian waters, and for the damage and loss of human life
which resulted frorn them, and that there is a duty upon Albania to pay
compensation to the United Kingdom."

The principle was afiirmed also in the Dispositif of the Judgment (at p. 36).
25. This same principle has been given explicit acceptance in the practice of
the United States. The resuit of the Punuy incident in 1937 was the following
telegram from the United States Secretary of State to the Ambassador in Tokyo,
for transmission to the Japanese Government :

"342. Please communicate promptly to Hirota a note as follows:

The Government and people and the United States have been deeply
shocked by the facts of the bombardment and sinking of the U.S.S. Panay
and the sinking or burning of the American steamers Meiping, Mviun and
Meisicln[Meihsia] by Japanese aircraft.
The essential facts are that these American vessels were in the Yangtze
River by uncontested and incontestable right, that they were flying the
American flag : that they were engaged in their legitimate and appropriate
business, that they were, at the moment, conveying American official and
private personnel away from points where danger had developed ; that they
had several times changed their position, moving upriver, in order to avoid
danger, and that they were attacked by Japanese bombing planes. With
regard to the attack, a responsible Japanese naval officer at Shanghai has
informed the Commander-in-Chief of the American Asiatic Fleet that the
four vessels were proceeding upriver: that a Japanese plane endeavoured to
ascertain their nationality, flying at an altitude of three hundred meters, but
was unable to distinguish the flags; that three Japanese bombing planes, six

Japanese fighting planes, six Japanese bombing planes, in sequence, made
attacks which resulted in the damaging of one of the American steamers,
and the sinking of the U.S.S. Pclnayand the other two steamers.
Since the beginning of the present unfortunate hostilities between Japan
and China, the Japanese Government and various Japanese authorities at
various points have repeatedly assured the Government and authorities
of the United States that it is the intention and purpose of the Japanese
Government and the Japanese armed forces to respect fully the rights and
interests of other powers. On several occasions. however, acts of Japanese
armed forces have violated the rights of the United States, have seriously
endangered the lives of American niitionals and have destroyed American
property. In several instances. the Japanese Government has admitted the
facts, has expressed regrets, andhaç given assurances that every precaution
will be taken against recurrence of such incidents. In the present case. acts
ofJapanesearmed forces have taken place incomplete disregard of American
rights, have taken American life, and have destroyed American property
both public and private.
In these circumstances, the Government of the United States requests and
expects of the Japanese Government a formally recorded expression of

regret, an undertaking to make complete and comprehensive indemnifi-
cations. and an assurance that definite and specifiç steps have been tüken
which will ensure that hereafter American nationals, interests and property
in China will not be subjected to attack by Japanese arrned forces or
unlawful interference by any Japanese authorities or forces whatsoever."
(Source: Lilreign Relations oJilte Unilrd Stuter., Jupun,1931-1941, Vol. 1,
U.S.G.P.O., 1943, p. 523.)250 MILITARYAND PARAMILITARYACTIVITIES

26. Similarly, in a Note addressed to the Bulgarian Government on 2 August
1955, the United States Government stated the following :

"The United States Government protests emphatically against the brutal
action of Bulgarian military personnel on July 27, 1955, in firing upon a
commercial aircraft of the El Al Israel Airlines. which was lawfully engaged
as an international carrier. This attack, which resulted in the destruction
of the aircraft, and the death of al1 personnel aboard, including several
United States citizens, constitiites a grave violation of accepted principles of
international law. The Bulgarian Government has acknowledged responsi-
bility for this action.
The United States Governmcnt demands that the Bulgarian Government
(1) take al1 appropriate measures to prevent a recurrence of incidents of

this nature and inform the United States Government concerning these
measures; (2) punish al1persons responsible for this incident; and (3) pro-
vide prompt and adequate compensation to the United States Government
for the fimilies of the United States citizens killed in this attack." (White-
man, Digest of IntrrnutionulLaw, Vol. 8, U.S.G.P.O., Dept. of State Publicn.
8290, p. 891.)
27. Further evidence of United States recognition of the general principle can
be found in the following sources:

Whiteman, op. cit.. pages 888-906.
Lillich (ed.), Iniernutionul Luw of Srute Responsihilityfor Iryirries to Aliens,
Charlottesville, 1983,pages 221-224.

B. The Principleof EffectiveReparation

28. The general principle governing the actual modalities of reparation was
laid down by the Permanent Court in the ChnrzbrvFuctory (Merits) case in a
passage which has been recognized as a classical statement :

"The essential principle contained in the açtual notion of an illegal act -
a principle which seems to be established by international practice and in
particular by the decisions of arbitral tribunals- is that reparation must,
as far as possible, wipe out al1 the consequences of the illegal act and
ce-establish the situation which would, in al1probability, have existed ifthat
act had not been committed. Restitution in kind, or, if this is not possible,
payment of a sum corresponding to the value which a restitution in kind
would bear; the award. if need be, of damages for loss sustained which
would not be covered by restitution in kind or payment in place of it -

suçh are the principles which should serve to determine the amount of
compensation due for an act contrary to international law." (Judgtncvit
No. 13, 1928, P.C.LJ., Series A, No. 17, p. 47.)
29. The principle has been given prominence in the sources of modern
international law :seeCheng, CeïlrrulPrinciplesofLaw,London, 1953,page 233 ;
Oppenheim, Intrrnaiiotial Law, Volume 1,8th edition, by Hersch Lauterpacht,
page 353; Jiménezde Aréchagain S~rensen (ed.). Munualof PlrhlirInternuiional

Luiv, London, 1968, pages 567-568; O'Connell, International Luw, 2nd edition,
London. 1970, II, page 1115 ;Verzijl,lnternrifionulLaiv in Historical Per.~pective,
Volume VI, Leiden, 1973,page 742 ;Jiménezde Aréchaga. 159 RecueilLJCcS ours
(1978-l), page 286; Podesta Costa and Ruda, Derrcho InternarionalPzrhli~*o 5,th
edition, 1979,pages 189-190;Rousseau, Droit intr~rnationrilpuhlicV , ,Paris. 1983. page 232 (para. 229) ; Tunkin, InternaticinulLaw, Moscow, 1986,page 234 ; the
I.C.J. Pleudingsin the AericllIncidecnat se (at p. 107(Memorial of lsrael) and
at p. 364 (Memorial of the United Kingdom)).
30. The draft articles prepared by Mr. Riphagen, Special Rapporteur of the
International Law Commission, on "the content, forms and degrees of inter-

national responsibility", include thefollowing (Art. 6):
"1. The injured State may require the State which has committed an
internationally wrongful act io:

(a) discontinue the act, release and return the perçons and objects held
through such act, and prevent continuing effects of such act: and
(b) apply such remedies as are provided for in its interna1 law; and
(c) subject to Article 7, re-establish the situation as it existed before the
act; and
(d) provide appropriate guarantees against repetition of the act.

2. To the extent that it is materially impossible to act in conformity with
paragraph 1 /c),the injured Statemay require the State which has committed
the internationally wrongful act to pay to it a sum of money corresponding
to the value which re-establistirnent of the situation as it existed before the
breach would bear." (Fifth Report, Yrarbook the International Luit,
Commission, 3984, 11 (Part One). p. 1 at p.3; and see also ibid., 1985, II
(Part One), p. 4 at pp. 8-10.)

31. It will be readily apparent that the formulation in paragraph 2 of the
draft articlereflects the principle stated by the Permanent Court in the ChnriOw
Fur*torycase. In its Report on the work of the thirty-eighth session. the Com-
mission stiited that during the Drafting Cornmittee's consideration of draft
Article 6: "There had been a large measiire of consensus with respect to
paragraph 2 of the draft article" (Reporcf [lieInteniutioilul Luiv COmmi~v.sioonn
thc Workof Jls Thirty-Eighlh Session, 5 May-11July 1986, G.A. OfjlcialRecords,
41st sess.. Suppl. No. 10(A/41/10), pp. 96-97 (para. 65), footnote 73).
32. Judge Sir Hersch Lauterpacht underlined the significance of the views ex-
pressed in the case concerning the ClrorzriwFuctoryin his work Tite Development
of InternationalLaiv hy the International Court, London, 1958(at pp. 315-3 16).
In his examination of the issue of rneasure of damages Lauterpacht points out

that in the Judgment of the Chorz(jrvFuctnry case the Permanent Court rejected
assertions "that the responsibility of States must be limited to damages arising
directly out of the injurious event, to the exclusion of al1indirect and consequential
damages". In the opinion of Lauterpacht, the Permanent Court leaned in favour
of etrective reparation.
33. The general principle applicable is often stated in terms of the duty to pay
"just compensation" : see the Norwqiun Sl7ipownrr.s'Clrrims,Reports of Itlter-
nationul Arhitrul Aivards, 1, page 307, at page 339. Another formulation refers
to the requirsment that compensation be "adequate": see Cfiarzhir~Facftiry,
Jurisdiction, JirclgmentNo. 8, 1927, P.C. I.J. Reports, Series A. No. 9, page 21 ;
Whiteman, Digest oJ Int~rnutionalLaw, Volume 8, U.S.G.P.O., Department of
State Publication 8290, 1967,page 1143.
34. In the specific context of the assessment of compensation for damage to
or destruction of property the element corresponding to the principle of effective
reparation isthe principle of replacement value. The logical connection between

the principle as stated in theCl~oridivFuctory case (Merits) and the principle of
replacement value is evidenced by the written pleadings of the United Kingdom
in the CorfirCliannel(Merits) case. In that case the claim for the destruction of252 MILITARYAND PARAMILITARY ACTIVITIES

the destroyer H.M.S. Suumarezwas for the cost of replacement (1.C J.Pkadings,
Corfu Chunnel,Vol. 1.p. 25, para. 18), and page 101 (Ann. 14). As the text of
the Memorial rnakes absolutely clear, this claim was based upon the passage
from the Judgment in the Chorz6i.rFactory (Merits) case (Memorial, p.48,
para. 95). (Cf. also the United Kingdom Memorial in the Anglu-IranianOil Co.

case, I.C.J. Pleadings,pp. 115, 117.) Moreover, it is significant that the Court
accepted the valuation of the destroyer presented by the United Kingdom: see
the Judgment in the Compensation phase, I.C.J. Reports 1949, page 244 at
pages 248-249.
35. An associated factor to be taken into account isthe policy of not permitting
a Respondent State to take advantage of its own wrongdoing when that
wrongdoing creates conditions in which the more normal methods of valuation
are difficult to apply.n the TruilSmrlter Arbitrurion,the Tribunal in its lnterim
Award stated that :

"ln considering the second part of the question as to indemnity, the
Tribunal has been mindful at al1 times of the principle of law which is set
forth by the United States courts in dealing with cognate questions, particu-
lady by the United States Supreme Court in Stary PurchmentCumpuny v.
PutrrsonParchnientPuper Cunzpany(1931), 282 U.S. 555 as follows:

'Where thetort itself isof such a nature as to preclude the ascertainment
of the amount of damages with certainty, it would be a perversion of
fundamental principles of justice to deny al1relief to the injured person,
and thereby relieve the wrongdoer from niaking any amend for his acts.
In such a case' while the damages may not be determined by mere specu-
lation or guess, it will be enough if the evidence show the extent of the
damages as a matter of just and reasoniible interference, although the
result be only approximate'." (Interirn Decision, 16 April 1938; Reports
of Int~rnulionuAl rbitral Awurds.111,p. 1905at p. 1920.)

36. This statement of principle by the Tribunal has been adopted by the
Government of the United States and thus it is quoted, accompanied by further
citations, in Hackworth, Bige.rt <>fItz~ernutionuLluiv, Volume V, U.S.G.P.O.,
Washington, 1943, page 721. Moreover, the quotation in Haçkworth from the
Interini Award in the Trail Srnelter Arbttration is irnmediately preceded by
passages from the Churzbw Foctor(yMerits) Judgment. including the passage
quoted earlier (para. 28) containing the judicial affirmation that "reparation
must, as far as possible, wipe out al1 the consequences of the illegal act . .."
(Hackworth, op. cir., pp. 719-720).

C. The UnitedStates Government Has Adoptedthe Principleof Effective
Reparation

37. The passage from the Judgment in the ChorzhivFaciory (Merits) case set
forth above has been adopted and approved in the two modern authoritative
Digests of international law published with the authority of the United States
Government :seeHackworth, Digesfrfln~ernationalLuiv,VolumeV, U.S.G.P.O.,
Washington, 1943, pages 719-720; and Whiteman, Digest of International
LLIW,Volume 8, Department of State Publication 8290, Washington, 1967,

pages 1137-1 138, 1199. The key element in the Chorzbw FacEriryJudgment is
also quoted in the United States Memorial in the case concerning UnitedStates
Diphmatic and ConsularSruffin Teliranin the following passage: "Reparation must, as far as possible, 'wipe out al1the consequences of
the illegal act and re-establish the situation which would, in al1probability,
have existed if that act had not been committed' (Foctory ut Chorzciw,
Merits, JudgmentNo. 13, 1928, P.C.I.J., Series A, Nu.17, p. 47). Though
the damage suffered by individuals may serve as a convenient scale for the
calculation of the reparation due to the State, the damage suffered by the

State itself must also be considered.(Ibid., at p. 28.)
In the case before the Court, the United States asserts its right to full
compensation for the injuries suffered both by the United States as a State
and by its nationals as victims of Iran's unlawful actions." (Memorial of
the Government of the United States of America, January 1980,p. 78.)
38. This recent expression of the view of the United States Government in the
exactly similar context of State responsibility for unlawful conduct is of particu-
lar importance for present purposes. Not only does the principle of effective

reparation form part of customary international law but there is unequivocal
evidence that the United States has expressly accepted the principle (cf. the
Judgment in the Merits phase ofthe present case, I.C.J. Reports1986, pp. 99-107,
paras. 188-204, pussim). Moreover, the United States Memorial in the United
States Dipbmulic and ConsularStuf in Tehrancase relates to a case, like the
present, which involved claims not based upon the diplomatic protection of
individuals but directly upon the interests of the State.
39. Itis generally recognized that in the case of a deliberate intention to harm
(do/, dolris), the seriousness of the breach of the legal obligation concerned iç
relevant to the way in which compensation is to be assessed and thus points
to a calculation which does not lean in favour of the Respondent State: see
Brownlie, System of the Luw of Nations: Srute Respnnsibilily, Part 1, 1983,
page 224.

D. TheGoverningminciplesin Summary

40. In the light of the foregoing, the principles governing the general approach
to assessment of compensation in the present proceedings can be expressed in

summary form.
First: the mode of reparation must be effective and thus wipe out al1 the
consequences of the illegal act.
Serond: the Respondent State has expressly accepted the principle of effective
reparation.
Tliird:wherethe wrong itselfis of such a nature as to preclude the ascertain-
ment of the amount of damages with certainty, it would be unjust to deny relief
and thus relievethe wrongdoer from making amends. (See the TruilSmelterArbi-
trutioïr,InterimAwurd,above, para. 35.)

Fourrh:in the circurnstances of the present case, thestandard of reasonableness
is appropriate in the assessment ofdamage especially in view of the necessarily
üpproximrtte nature of the process of valuation (see the Corfu Chunnelcase,
Compensation phase, /. CJ. Reports 1949, p.244 at p. 249 ; and also the Truil
SnrclterArhitrution,InterimAwurd,above, para. 35).
Fifth: the serious character of the conduct of the Respondent State is relevant
io the process by which compensation is assessed. CHAPTER2

THE UNLAWFULCONDUCTOF THE UNITED STATES UNDER
FINDINGS 3 AND 4: THE MODALITIES OF COMPENSATION

Introduction

41. In this and the following chapter the Ciovernment of Nicaragua will
examine the precise implications, for the present phase of the proceedings, of the
third and fourth subparagraphs of the Dispositif of the Judgment on the Merits.

These paragraphs contain the iollowing key elements of the decision on the
Merits :
"(3) By twelve votes to three,
Deciclesthat the United States of America. by training, arming, equipping,

financing and supplying thecontraforces or otherwise encouraging, support-
ing and aiding military and paramilitary activities in and against Nicaragua.
has acted, against the Republic of Nicaragua, in breach of its obligation
undcr customary internatioiial law not to intervene in the affairs of another
State;
By twelve votes to three,

(4) Decir1t.sthat the United States of America, by certain attücks on
Nicaraguan territory in 1983-1984,namely attacks on Puerto Sandino on
13 September and 14 October 1983; an attack on Corinto on 10 October
1983; an attack on Potosi Naval Base on 415 January 1984: an attack on
San Juan del Sur on 7 March 1984; attacks on patrol boats at Puerto
Sandino on 28 and 30 March 1984; and an attack on San Juan del Norte
on 9 April 1984: and further by those acts of intervention referred to in
subparagraph (3) hereof which involve the use of force, has acted, against
the Republic of Nicaragua, in breach of its obligation under customary
international law not to use force against another State."

Section A. The General Significanceof Subparagraph3 of the Dispositif

42. In the present Chapter, the Government of Nicaragua intends to set out
its understanding of the legal implications of the third finding in relation to the

other parts of the Dispositif andto the Judgment as a whole.
43. The most obvious inference is that the United States isresponsible for the
actual consequences of the operations carried out by the cantm forces against
Nicaragua. It makes no difference for present purposes that the activities of the
United States take the particular form of "training. arming, equipping, financing
and supplying the contruforces or otherwise encouraging, supporting and aiding"
military and paramilitary activitiesgainst Nicaragua. The responsibility gener-
ated must be presumed to be the normal form of unqualified State responsibili;y
the United States "has acted", according to the Dispositif, "in breach of its
obligation under customary international law not to intervene in the affairs of
another State". MEMORIAL(COMPENSATION) 255

44. As the Judgment emphasizes (p. 65, para. l l6), the United States is
responsible for its own conduct vis-à-vis Nicaragua "including conduct related
to the acts of thecontras". As the Court makes plain in a long sequence of the
Judgment, the question of the responsibility of the United States in respect of
"violations of humanitarian law" by the contra forces is distinct from the overall
question of the responsibility of the United States for breaches of customary
international law: see the Judgment, pages 63-65, paragraphs 113-116.
45. In the same connection, the examination of "the question of degree of
control" of the contras by the United States Government in the Judgment
(pp. 53-65, paras. 93-116) is related to the precise issue of the responsibility of

the United States for activities of thecontras involving breaches of the humani-
tarian law of war and not otherwise. This is confirmed by the later sections of
the Judgment, which efaborate upon the whole question of responsibility for
violations of "the fundamental general principles of humanitarian law" :see the
Judgment, pages 112-115, paragraphs 216-220 ; pages 129-130, paragraphs
254-256 ;pages 138-139,paragraphs 277-278.
46. In conclusion, apart from the specificissueof the breaches ofhumanitarian
law (an issue not actually raised in the pleadings presented by Nicaragua), the
reponsibility of the United States depends upon its relationship with the contra
forceswhether or not this relationship involved some degree ofcontrol amounting
to the high standard referred to hypothetically by the Court (pp. 65-66,para. 115)
as "effective control of the military or paramilitary operations". What is sig-
nificant is the finding by the Court that there was a suficicnc relationship on the
basis of the evidence available to justify the important decision that the
"United States of America ...has acted ... in breach of its obligation under
customary international law not to intervene in the affairs of another State". In
any case, the nature of the relationship has been clarified as a consequence of

the evidence produced during the "Iran-Contra" hearings. (See Ann. X.)
47. In its Memorial, Nicaragua claims compensation from the United States
for damage done in the course of the military and paramilitary operations against
Nicaragua. In many instances, the immediate actions that Ied to the deaths,
injuriesand material damage were executed by the contras. Nicaragua's claim to
be compensated forthe damage isbased upon the fact that it was the consequence
of the unlawful conduct of the United States in relation to the contras.
48. The responsibility of the United States for contra damage is not dependent
upon imputation to the United States of the acts of the contras. It is important
not to "confuse the imputation of an illicit act with the imputation of resulting
responsibility" (see, for exampfe, Judge Ago, 68 Recuei! des cours (1939-Il),
p. 451).
49. Although action by an individual acting quu individual (and not qua organ
of the State) cannot be imputed to the State, the State ultimately may be charged
with responsibility for the individual action.uch a result is reached, for exampie,
when a State fails to meet an international obligation to prevent the individual's
action or to punish the individual once the deed has been accomplished. The
illicit act is the omission of the organs of State, not the individual's actio: see
Judge Ago, Fourth Report, Yeorbaokof the International Law Commission, 1972,

II, pages 95-126 ; and his separate opinion, LC.J. Reports 1986, pages 189-190,
paragraphs 18-19.
50. Such is the case as regards United States support for the contras. The
immediate actions of the contras may be compared to harmful conduct by an
individual, and the assistance of the United States to breach of an international
obligation to prevent or punish. Just as States areunder an obligation to prevent
cir punish certain conduct, the United States was, as deterrnined unequivocally256 MILITARY AND PARAMILITARY ACTIVITIES

by the Court, under an obligation not to assist the contrusin the way it has. It
is from the breach of that obligation that the injuries inflictedupon Nicaragua
by the contrasarose; and it is thuf breach that entails the responsibility of the
United States to make reparation for those injuries. As Judge Ago points out in
his separate opinion at the Merits phase of this case the Court applied the
pertinent principlesin the case concerning UnitedStutes Diplnmaricand Consular

Staff in Tchran.
51, It must follow, in the respectful submission of the Government of
Nicaragua, that the United States is responsible for al1the consequences of its
support for "the military and paramilitar~ activities in and against Nicaragua"
provided that the followingtwo conditions are sütisfied:
(a) that the conduct constitutes breaches of the obligation not to intervene in

the affairs of Nicaragua; and
(b) that the responsibility ta be imputed is not in technical terms based upon
violations ofthe fundamental principles ofhumanitarian law.
52. The second condition is obviously satisfied. Asto the first condition, given
the lack of lawful justification (see the Judgment, pp. 110-111, paras. 210-211,
pp. 126-127, 246-2491,it must followthat the activitiesof the United States in
assisting the contrasab initioand ipsfoacto constitute acts of intervention in the

internal affairs of Nicaragua for the harmful consequences of which the
Respondent State is bound to make reparation.
53. This view ofthe matter is confirmed by the form and content of the third
paragraph of the Dispositif. It is also confirmed by the substaotial evidence to
the effect that the persistent intention of the Government of the United States
was, and continues to be, to overthrow the Government of Nicaragua. The
evidenceof this intention was presented in the Memorial of Nicaragua (see, in
particuiar, Chaps. 1and II). The Judgment of the Court recounts in some detail
the covert objectives behind UnitedStatessupport for the contraswith the overall
aim of forcing major changes of internal policy upon the Government of
Nicaragua: see the Judgment, pages 53-60, paragraphs 93-101. As the Court
acknowledges,the policy wasone of "covert operations" involving "military and
paramilitary operations" in Nicaragua orchestrated and supported by the United
States Central Intelligence Agency (CIA) and with specific political purposes
affecting the internal affairs of Nicaragua. The contru forces were the chosen

instrument of this policy and the consequence of the third paragraph of the
Dispositif is that the measure of the United States responsibility must be based
upon the damage and loss caused by the operations of the cnntruforces within
Nicaragua.
54. This construction of the Dispositif is amply confirmedby the contents of
the Judgment of the Court overall. In particulür, the passages devoted to the
application of the principle of non-intervention (pp. 123-125,paras. 239-243)
relate the third finding of the Dispositif to the covert war involving thecontra
forces. The Court refers to "the coercion" of Nicaragua (para. 241) and to the
giving of support to armed bands "whose purpose is to overthrow the govern-
ment" of Nicaragua (ibid.). Moreover, the observations contained in paragraph
242 relating to the provision of "strictly humanitarian aid" and connected
questions rest on the premise that the finding on violations of the principle of
non-intervention concernsthe activities ofthe contruforcesand the consequences

of those activities.
55. Paragraph 4 of the Dispositif is complernentary to paragraph 3 in two
significant ways. First, the decision on the principle of non-intervention is
reinforced and repeated in respect of those acts of intervention "which involve MEMORIAL(COMPENSATION) 257

the use of force". Secondly, the picture of United States responsibility for
"military and paramilitary activities in and against Nicaragua" is completed
(aside from the later findings concerning overfiights and the laying of mines) by
the inclusion of the specificattacks against Puerto Sandino and other targets.
56. The Government of Nicaragua would respectfully draw the attention of
the Court to the intimate relationship which the third and fourth paragraphs of
the Dispositif bear to each other. Together with the specificoperationsattributable
to the acts of agentsof the CIA, the fourth paragraph, like its predecessor, refers
broadly to the responsibility of the United States resulting directly from its
assistance to thecontrusin Nicaragua. Thus this aspect of the Dispositif and the
relevant passages of the Judgment underline the responsibility of the United
States in respect of the damage and loss caused by the contra operations in
Nicaragua. The position is elucidated by the following passage of the Judgment :

"Nicaragua has also claimed that the United States has violated Article 2,
paragraph 4, of the Charter,and has used force against Nicaragua in breach
of its obligation under customary international law in as much as it has
engaged in

'recruiting, training, arming, equipping,financing, supplying and otherwise
encouraging, supporting, aiding, and directing rnilitary and paramilitary
actions in and against Nicaragua' (Application, para. 26 (a) and (cl).
So far as the claim concerns breach of the Charter, it is excluded from the
Court's jurisdiction by the multilateral treaty reservation. As to the claim
that United States activities in relation to thecontrusconstitute a breach of
the customary international law principle of the non-use of force, the Court
finds that, subject to the question whether the action of the United States

might be justified as an exercise of the right of self-defence, the United
States has committed a prima facieviolation of that principle by its assistance
to the contrasin Nicaragua, by 'organizing or encouraging the organization
of irregular forces or armed bands ... for incursion into the territory of
another State', and 'participating in acts of civil strife.. in another State',
in the terms of General Assembly resolution 2625 (XXV). According to
that resolution, participation of this kind is contrary to the principle of the
prohibition of the use of force when the acts of civilstrife referred toinvolve
a threat or use of force'. Inthe view of the Court, while the arming and
training of the contras can certainly be said to involve the threat or use of
force against Nicaragua, this is not necessarily so in respect of al1 the
assistance given by the United States Government. In particular, the Court
considers that the mere suppfy of funds to the contras, while undoubtedly
an act of intervention in the internal affairs of Nicaragua, asllbe explained
below, does not in itself amount to a use of force." (I.C.J. Reports 1986,
pp. 118-119,para. 228.) (And see also ibid., p. 123,para. 238.)

57. The logical force of the third and fourth paragraphs of the Dispositif in
combination is the responsibility of the United States for the loss and damage
caused by the activities of the contras both when the use of force was involved
and also in respect of acts not involving the use of force but which constituted
intervention in the internal affairs of Nicaragua. The comprehensive nature of
this responsibility is underlined by the considerations advanced in the passage
from paragraph 228 of the Judgment quoted above. This points out that the
supply of funds to the contras did not amount to a "use of force" but was
"undoubtedly an act of intervention in the internal affairs of Nicaragua". From
this and from the logical structure of the Judgment as a whole, the responsibility258 MILITARYAND PARAMILITARY ACTlVlTIES

for the consequencesof the acts of the ctintraforcesmust be borne by the United
States byreason oftheussiriance givento theconfrasand witholit any reqiiirement
that individual acts of sabotage. murder and pillage should be proved to have
been carried out as a result of planning or particular orders on the part of the
United States. Indeed. if such proof were called for, the third subparagraph of

the Dispositif would be rendered more or less otiose. And this would be a
surprising outcome given the priority and prominence accorded to the third
finding of the Dispositif in relation to the other findings on issues of substance.
58. In the iight of the framework provided by the logical implications of
certain key elements both of the Dispositif and of the Judgment as a whole, it
becomes possible to develop the ilindusopemndi appropriate for the valuation of
the elementsof loss and damage resulting from tlie activities ofthe contruforces
and other instruments of the United States in and against Nicaragua.

Section B. TheMode ofCompensationfor Deathand Personal Injuries

59. In the submission ofthe Government of Nicaragua, the inevitable conse-
quence of the findings of the Court in the third and fourth paragraphs of the
Dispositif is that the United States is bound to pay appropriate compensation
for thedeaths, persona1injuriesand material darnage, resultingfrorn itsviolations
of the pertinent obligations of customary international law.
60. The existing literature on the subject of compensation in case of death

presents a version of the relevant principlesthe reliabilityand relevance of which
are substantially reduced by the following important considerations :
61. (0) The propositions are too general and fail to recognize that the precise
mode of settling problems of compensation is connected with the substantive
law bearing upon the particular case and the conduct of the parties. In a work
published in 1983,Brownlie observed :
"There isan intrinsicconnection betweenthe particular rulesof substantive
law and the mode which isto govern probleins of 'remoteness'and 'measure

of darnages'.This undoubted truth is neglectedin the standard works which
tend to purvey general propositions concerning compensation in inter-
national law." (Systern ofthe Lurv of Nations: State Responsibility, Part I,
1983, p. 224; and see also the Preface, p. vi.)
62. (b) The propositions inthe standard works reflectthe naturally conserva-
tive approach of Claims Commissions concerned with cases involvingdeaths and
personal injuries resulting from the acts and omissions of members of the
administrative apparatus, which acts and omissions were the result of a failure

to show "due diligence" rather than the implementation of a deiiberate State
policyestablished at the highest executiveleveland involvinga persistent pattern
of activity.
63. (c) The treatment of the subject of compensation in the standard sources
(many of which were published beforeWorld War II) tends to ignore some
significant episodes of modern State practice and, in particular, the written
pleadings in the Acrial Incidentcase in 1959.
64. The picture which emerges from the legal literature in relation to the
question of compensation for unlawful killing may be summarized as follows :

(i) The primary basis of calculation is the loss of economic support suffered
by dependent relatives(and loss to the decedent's estate is not recoverable).
(ii) In the case of the death of relatives, such as wivesor children who did not
make pecuniary contributions to their near relatives, recovery is still ailowed either on the principle that the severing of ties and mental anguish calls for
reparation on moral grounds or on the basis of an expectancy of future
contributions or assistance: see Whiteman, Dumuges in International Law. 1,
Washington, 1937,pages 693-700.
(iii) In appropriate cases the amount of compensation will be enhanced by

referenceto the criterion of the çerious character of the misconduct causing the
deüth : see Feller, The Mexican CluirrzsCommissions 1923-1934,New York. 1935,
pages 295-297.
The principles summarized above are derived from the following materials:
Hackworth, Digest of' Intcrnutionul Law, V, 1943,pages 747-755; Lillich (ed.),
Internationul Luw oj'State Rrsporisibilityfor Injuries to AEiens,1983,pages 216-
224; O'Connell, Iniernutional Law, 2nd edition, 1970,11,page 1 119: Felfer, The

Me.~icunCluinis Commissirin1923-1934,pages 110-112, 295-300,302-303,306;
Whiteman, DigestofInterncrtiona1Law, Volume8, 1967,pages888-906 ;Borchard,
Diplotnaiic Prciteclinn of Citizens Ahroacl. 1925, pages 424-425; Verzijl,
Internaiionul Laiv in Historicul Perspective, VI. Leiden, 1973, pages 750-752 ;
Ralston, The Luiv and Procedureof flnternutianalTrihunals,Revisededition 1926,
pages 259-262; Ralston, Supplement 1936,pages 126-1 30 : Whiteman, Dumrlgcs
iti lntrrnationul Law. 3 volumes, 1937-1943.Volume 1:pages 637-796.
65. However, itmust not be assumed that these principles are applicable
without modification to the present circumstances. On careful examination of
the sources it will be seen that the régimeof compensation described in the Iegal
literature is designed to deal with the situation in which an alien residenf or
citherii~isleurzfullypresent ivithinthe re.~pondttitState's territory is killed either by
LLprivate person or by an oficial, but in either case without the killing being a
deliberate act of State policy authorized by the government. In such cases it is
not the killing itselfbut the subsequent failureoftheauthorities of the Respondent

State to take adequate steps to apprehend and punish the killer (or to provide
adequate domestic remedies), which is the basis of legal responsibility. The
present case is qualitativelyifferent. The deathsand injuries to be compensated
are the consequences of a deliberate policy adopted at the highest levels of
Government decision-mnkingin the United States.
66. Whilst the circumstancesare not exactlysimilar, the pleadings in the Aerial
Inririeilf case of 1959 have considerable relevance to the issues presently be-
fore the Court. In that case the claimant States contended and the Bulgarian
Government accepted that the air-defence units of the latter had without
reasonable excuse shot down an Israeli civil airçraft which had innocently
wandered into Bulgarian air space. Some of the victims were citizens of the
United States and the United States, alongside Israel and the United Kingdom,
submittedApplications instituting proceedingsbeforethe Court against Bulgaria:
1.C.J. Pleadit~gs,Aeriul Incident ($27 July 1955. It may be recalled that the
Court found that it did not have jurisdiction to adjudiciite upon the dispute

brought before it by Israel; and the proceedingsbrought by the United Kingdom
and the United States were discontinued in 1959and 1960respectively.
67. Of particular relevancefor present purposes are certain passagescontained
iri the Memorial presented to the Court by the United States. These passüges
bring out very clearly the delictuaf element in claims such as the present. The
niost helpfulparts of the United States Memorial read as follows:
"1. The United StatesGovernment desiresto remind the Court again that
the caseis not one ofdamages, sufered by negligentact or vicariousliability.

This case is one which, if committed by individuals, would submit them to
charges of murder and in many countries to capital punishment and certainly260 MILITARYAND PARAM~LITARYACTIVITTES

to maximum penalties. The fact that this Court may feel it has not power
to issuesuch judgments should not, it is submitted, prevent it from notiiig
that the Bulgarian Government is hardly in a position to quibble about
dollars. However, the sum of $257,875 requested in the Application on

behalf of theprivate American claimants, is purely compensatory.
2. On the subject of additional amends, of which the United States gave
notice in its Application, paragraph 3, the United States Government
respectfully submits that the Court should grant an additionai judgment to
the United States Government for $100,000 for the additionai wrongs
wantonly committed bythe Bulgarian Government ;that is, other than those
committed against the next of kinwhosemonetary claims for compensatory
damages have been espoused by the United States. For if we were to follow
only the compensatory theory of civil damages in general, we might
conceivably reach a point where no damages would be payable though
treacherous murders were committed internationally by one government on
the nationals of another government. Additional amends to the injured
government are therefore desirable and even nccessary." (1, C.J. Pleadings,
Aeriul Incident, p246.)

68. The delictual element in the Aeriul Incident case is given appropriate

emphasis in the United States Memorial and in fact the pleading concludes with
a special claim of $100,000 "on account of the elements of fraud, deceit, and
wilful and premeditated killing of American nationals" (ibid., p. 248). However,
for present purposes the point of relevance is the emphasis upon the element of
delict with which the entire claim is imbued, rather than the additional daim as
such. Thus in the case under examination the deaths, injuries and other losses,
aie part and parce1 of the violations recognized inparagraphs 3 and 4 of the
Dispositif of the Judgment on the Merits. It follows that the deaths should be
regarded in close association with and as elements of those violations. It ülso
followsthat the amount ofcompensation due for deaths shouldnot be caiculated
according to the criterion of loss of economic support suffered by dependent
relatives.
69. It is an incontrovertible fact that in the circumstancesof the Nicaraguan
economy and the conditions of the rural areas during the period of terrorist
attacks by the contrtiforces,the conceptof econorniclosscaused by the individual

killings is impossible to apply. Thus the procedure for estimating an equitable
measure of compensation should reflect the sucial and economic realities of
Nicaragua during the material period. As the content of the United States
claim in the Aeriul Incidentcase indiçates, the delictual element present in the
legal foundations of the claini provides strong justification for a monetary
compensation which reflectsthe essential nature of the wrongdoing.
70. The cons~derationsadvanced above apply mutatis mutandis to the fixing
of compensation with respectto personal injuries.The principles set forth inthe
standard words place emphasis on proof of loss of economiç support on the part
of dependents, as in the case of death : see Whireman, Durnages in Internutionul
Law, 1, 1937,pages 517-634: Verzijl,Internotional Luw in Historical Perspective,
VI, 1973, pages 751-752; Hackworth, Bigti~r of International Law, V, 1943,
pages 741-743; Feller, The i2li?xicunClairn~ Commissions, 1923-1934, 1935,
pages 295-300, 302-303 ; Whiteinan, Digest of It~terrtu~iotzuLlaiv, VI11(Sept.
1967),pages 885-888.However, this version of the applicable legal principles is
subject to the principle emphasized in the United States Memorial in the Aerial

Incident case that the compensation should reîlect the delictual character of the
acts which caused the death or injuries. MEMORIAL(COMPENSATION) 261

71. In the Iight of the considerations set Forth earlier, the method most
;ippropriate for the purpose of arriving at a just and practical assessment of
compensation for deaths and personal injuries caused is the adoption of a lump-
sum as a reflection of the human iosses, which sum would at the same time be
both significant and comprehensive.

Section C. TheMode of Compensationfor Material Damage to Property

72. The present section of the Memorial is concerned exclusivelywith material
losses resulting from damage to property caused by the military and paramilitary
operations for which the United States is responsible.The losses to the economy
of Nicaragua are the subject of separate examination (in Chaps. 5 and 6 of the
Memorial).
73. As in the cases of death and personal injuries, so here, it is necessary to
relate the mode of establishing compensation to the framework of substantive
law within which the process of valuation is taking place. Thus the approach
adopted by the United StatesGovernment in its Memorial in the Aerial Incident
case is logically applicable. In short, the standard is related to delicts involving
intention (do/, dolus) and, in case there asmargin of appreciation in the matter
of valuation, the standard is that of damages for delict and not compensation
for mere unjust enrichment,

(a) The modus operandi : Replucernent Value
74. It is generally recognized that the precise form of reparation in a case of
State responsibility will depend on the particular circumstances and the merits
of the case: see Guggenheim, Truiti.de droit internatinno1public, II, Genève,
1954.page 67; and Oppenheim, Internaiionul LUIV, Volume 1, 8th edition by

Wersch Lauterpacht, 1955.page 353. In the case of dnmage or destruction of
property resulting from illegal conduct on the part of a State, the requisite
standard is that of effective reparation and this is plain from the Judgment of
the Permanent Court in the Chorzrjw Factory (Merits) case quoted above
(paragraph 28 of Chapter 1).
75. The modus nperundiwhich is the natural result of the concept of effective
reparation is that of replacement value and the publicists have recognized this:
see former President Jiménezde Aréchaga in Surensen (ed.), Manual of Public
lnrerntrtionulLaw. London, 1968, pages 567-568 ;and Guggenheim. Truif é de
droit international public,II, Genéve, 1954, pages 68-69. The United Kingdom
relied upon the principle in its Memorial in the Corfu Cliannel (Merits) case
(I.C.J. Pleudings, 1. p. 25 (para. 18) and p. 101 (Ann. 14)), and the Court
accepted the valuation of the destroyerH.M.S. Saurnarezpresented by the United
Kingdom : see the Judgment in the Compensation phase, I.C J. Reports 1949,
page 244 at pages 248-249.
76. In the circumstances of the present case, the criterion of replacement value
isespecially appropriate. As Professors Lillich and Christenson have observed :

"When a market value is impossible to prove because a radical change
has occurred in the economy of a country or for some other reason,
alternative methods of valuation must be used." (InterizationalClaims: Thrir
Prrpurationand Presentation, Syracuse, 1962,p. 76.)

However, in certain contexts the principle of market value can be readily applied
and produces the most equitable result, as, for example, in the case of damage
to export commodities.262 MILITARY AND PA'AKAMILITAA RCYT~VITIES

77. In conclusion, it would, it is submitted, be natural and in accordance with
principle for a tribunal assessing compensation in case of the destruction of
assets caused by breaches of international law to apply, except in those cases
where market value is readily ascertainable, the standard of replacement value.
This was the course adopted by Max Hüber in the Spanish Zone of Morocco
claims (1925)(Reports cflntrrnational Arhitrul Aivurds, II,p. 617 atp.735); and

in the Corfit Cllunnel(Assessmeiit of Compensation) case the Judgment States
that "the Court considers the true measure of compensation in the present case
to be the replacement cost of the Saumurezat the time of its loss" (C.J. Reports
1949,p. 244 at p. 249).
78. The claim relates to material damage to property. The scope of the daim
has been defined in accordance with general principles of law and the ordinary
standard of international law inthese matters, Thus the term "property" includes
al1assets and enterprises, whether in public or private ownership, which would
be recognized in the legal systenis of the world as items of value susceptible to
damage or total destruction.
79. In the case of items forming part of the productive economy, the claim
includes both replacement value and the loss of profits (lucruin cessatts) caused
by the damage or destruction. 'The inclusion cif lucrurplcessu~2.iss a generally
recognized principle ofinternational 1;iw.The following authorities, among many

others, recognize the principle: Jiménezde Aréchaga, in Silrensen (ed.), Manuul
of Public Internutional Law. London, 1968, pages 569-570; Rousseau. Droi!
internutioiralpi~blic,V, Paris, 1983. pages 223-225, paragraph 224; O'Connell.
IizternuiiotialLUIV,2nd edition, 1970'II, pages 1115-1 116 ;Guggenheim, Truitb
de droit internotionalpublic, II, Genève, 1954.page 71;Verzijl, InternufionalLaiv
in Historicul Perspectire, VI'Leiclen, 1973,page 756 ;McNair, InternutionalLaw
Ophiot~s,II,Cambridge. 1956,page 290; Jiménezde Aréchaga, 159 Recueil dees
cours (1978-l), page 286. In the case of loss of production causing damage to
the economy of a State the concept of lucrurn cessans is applicable mututi.~
mutuncli.~.
80. The concept of lucruni crssuns is a helpful tool but it should not be
regarded as more than that. Loss of profits and loss of production are simply
types of recoverable loss and fall within the broad concept of cornpensable
damage: see Guggenheim, op. cit. p,age 71. It follows that there may be other

forms of consequential economic loss, including items which would not corne
within the definition of loss of profits: see, for example, the United Kingdom
Memorial in the Anglo-Iranirin Oil Co. case, L C.J. Pleadirzgs, pages 117-118
(paras. 41-42). The overall criterion is always that of effectivearütion and the
principle that compensation constitutes a substantial alternative to restitution:
see the United Kingdom Memorial, ihicl., page 117. Consequently what is
involved is the "payment of a sum corresponding to the value which a restitution
in kind would bear" : Judgment in the Chorzbiv Factnry (Merits) case, P.C.I.J.,
Srries A, No. 17, page 47.

(b) Oft~erFf~rms of Ernnnmic Lo..cr

81. The present section of the Memorial is concerned exclusively with the
assessment of compensation for the destruction of and damage to capital assets
and goods. Whilst this process has taken account of loss of production (hcruni

ccssuns) in the simple mode, the question of consequential economic loss in the
form of damage to the development potential of Nicaragua has been left aside,
and this question, together with the lossescaused by the trade embargo instituted
by the United States, wiil be dealt with in Chapters 5 and 6 of the Memorial. Section D. The MethodologyEmployedin the Calculation of Compensationfor
lnjuryto Persons andProperty in the RelevantPeriod

82. Annex 1.2b contains tabulations showing the number of persons killed,
wounded and missing as irresult of United States military and pramilitary
activities, physical damlige to property and production losses. Annex 1.3h
explains the methods by which the information on these subjects was routinely
gathered and tabulated since 1983,including the forms and coding procedures
used. This Section of the Memorial summarizesthe methodological Annex and
the affidavit ofDr. Paul Oquist-Kelfey,National Director, National Directorate
nf Information. Organisation and Systems(DINFORS) of the Presidencyof the
Republic, under whoseauthority the procedures were developedand carried out.

(i) The Periodfroni the Begintzing of United States Mditary unri Purtimilitury
Activity ihrottgApril 1983

83. In the spring of 1983, President Daniel Ortega, then Coordinator of the
Junta of National Reconstruction, ordered the General Directorate of State
Information and Management (DIGE) in the General Secretariat of the Junta,
to make a study and analysis of the human and matenal damages of the United
States military and paramilitary activities to date. The study was to serve as a
basis for his officialreport,to the Council of State in May 1983.Dr. Paul Oquist,
who was then Director of DIGE, was in charge of the study. DlGE directed
each of the relevant national ministries to assemble and report the material in
its files.
84. The military and paramilitary activities were in their second year and
had not reached the levels later achieved. Incidents were relatively few and the
situation was so novel that the relevant ministriesmade special studies of many
of them. For exarnple, on 14 March 1982 the contrus attacked and destroyed
two important bridges at Rio Negro in Chinandega province and Ocotal in
Nueva Segovia, with significanteffects on the road transport network in those
areas. (Memorial of Nicaragua on Merits, IV, p. 12.) The Ministry of
Construction made a special analysis of these incidents and their effects, the
results of which were later included in the report to DIGE.
85. DIGE compiled and collated the data reported by the ministries and
assembled it into a singlecomprehensivereport that was transmitted to President
Ortega. The figures for the relevant periods in Annex 1.2h are taken from that
report. If anything, they understate the actual amount of damage, since they are
not based on a comprehensive and contemporaneous reporting system, but
simply reflect incidents and information that a partiçiilar ministry deemed im-

portant enough to retain in its files.

(ii) The Conputerized System In.srulledaftcr Muy 1983 '

86. After the first report on the extent of the human and material damage
done by the United States military and paramilitary activities, the collection of
information on these matters was put on a more systematic and methodical
basiç. The new information system was installed because, to perform routine
functions, carry out economic planning and conduct effective defence against
these activities, the Government of Nicaragua needed current and accurate

'Occasionallyreferredto inthisMemorial as the "DINFORS" system.264 MlLlTARYAND PAKAYILITARY ACTIVITIES

information on a timely basis about damage to persons and property. (Certificate
of Dr. Paul Oquist, Ann. 1.1,p. 3.) The system uses existing reporting channels
in each of the responsible ministries and institutions. The participating ministries
and their senior officiais are listed at Annex 1.3h, page 5.
87. Data collection begins in the field. The local official for each ministry is
responsible for ctriiripletingand forwarding a standardized form covering human

and material losses in his or her geographic area of responsibility each month.
Because crop cycles are annual, the Ministry of Agricultural Development and
Agrarian Reform reports material damage once a year. Thus, local police officers
will report through Ministry of lnterior channels, army unit commanders report
to the Ministry of Defence and zona1 or regional directors for each of the
economic ministries report to their respective superiors. The forms for these
reports and the instructions for completing them are reproduced in Annex 1.3b,
pages 6-43. Annex 1.4contains a sample of the original completed forms as filled
out in the field by the reporting officiais.
88. The fieldreports are sent to the regional officeof the appropriate ministry.
The regional office checks to ensure that the forms are filled out properly and
fully. It then combines and collates the information into a comprehensive regional
report and forwards it. together with the underlying field reports, to ministerial
headquarters in Managua. There the same process is repeated for the data

coming from al1 reporting regions. The ministries forward their reports to the
Ministry of the Presidency. There, after a final review and cross-check, this
information is entered into the computerized data base, where it can be used to
provide a country-wide picture. regional breakdowns of the information, or
data relating to speçified time periods or subject-matters. DINFORS, which has
overall responsibility for the coordination and operation of the system, performs
a final review of the data before it goesto President Ortega.
89. The details of the procedure Vary somewhat as between hurnan and
material injuries. Each local officia1reports al1injuries to persons in his area on
standardized forrns, which cal1 for the name, age, sex and occupation of the
persons killed or wounded, as wellas the type of injury. See Form 1,Annex 1.3 6,
page 6. Casualties are reported separately for "nuestro pueblo" - r'o~r
people" - and the cutitms. The ministries include the uncoded names of victims
in their reports to the Ministry of the Presidency. which compares and verifies
the information ta prevent double counting. (The same injury occasionally

appears on more than one local report.)
90. In the caseof property damage, the valuation is made at the regionalor head
officeof the Ministry,where personnel withthe necessary expertiseare located.The
national office ordinarily does the calculation of production losses. The list of
Informant Institutions in Annex 1.3h, page 5. shows thüt. iilthough almost every
institutionhas reported casualtiesand physicaldamage to property at some time in
the sevenwar years, only the major economic ministrieshave reported production
losses. These include the Ministries of Agricultural Development and Agrarian
Reform, Natural Resources and Environment, Fisheries, Mining, lndustry and
Intemal Commerce,as well as the privateand cooperativesectors.
91. The reporting system contains detailed instructions as to the type and
coding of physical damages and production loss and forms for recording the
results. These are reproduced in Annex 1.3h, pages 6-43. The forms and
instructions follow a sirnilar pattern, with variations to meet the special needs of
the particular economic sector involved. Thus, the forms for production losses
in the Mining Sector provide for a separate entry for each mi-jor mining

installation. The forms for the Timber and Forest Sector require separate entries
for lost production due to delay or suspension of projects, workforce and forestfires. In each case, the report calts for the number of board feet not produced,
the international price and the value in United States dollars and cordobas.

Similar special requirements appear in the forms for the other reporting entities.
92. Annex 1.5contains a complete record of the operation of the system with
respect to fishing for the month of December 1987. In this case. the local
reporting forms were iïlled out by the heads of ftshing companies and submitted
to the regional delegate of the Nicaraguan Institute for Fisheries (INPESCA) in
the departments of Chinandega and Zelaya. These delegates prepare a consoli-
dated report for each region. (Ann. 1.5,pp. 4-5; the blank forms are reproduced
in Ann. 1.3b, p. 41.) No casualties were reported for the period. Information
is given separately for production losses attributable to boats that have been
attacked, captured, destroyed by mines, burned or diverted for defence purposes.
The form shows the potential monthly catch of the boats in each group in
pounds (col. 9), the dollar price per pound (col. IO), the total dollar price of

production losses in each category (col. 11) and the corresponding cordoba price
(col. 12). The type of boat involved - lobsterman or shrimp boat - is shown
in column 13.At INPESCA headquarters, the reports are reviewedand validated
before they are submitted to the Ministry of the Presidency. Annex 1.5,page 6,
is the computer printout of the Ministry of the Presidency for production losses
for fishing for December 1987and contains entries for each of the items in the
earlier Departmental and lNPESCA reports. The dollar and cordoba value of
the losses in each category are summed up on the form at Annex 1.5, page 7.
'Thesesums are in turn carried forward to an overall summary of production
losses in al1economic sectors in the form at Annex 1.5,page 8. (The fisheries
entries appear at lines 4-9.)
93. The tables in Annex 1.2 h are the product of this computerized data system.
They show the numbers of killed, wounded and missing on an annual basis from

1980 until 31 December 1987,with separate figures for "nuestro pueblo" ("our
people") and the conrras.The totals for the period come to 6,760 killed, 10,546
wounded and 7,226 missing, not counting conrracasualties. (Ann. 1.2b, p. 5.)
94. lt is instructive to consider the distribution of these casualties by agr and
occupation. Although the largest number - 2.961 dead and 8,507 wounded -
were in the armed forces or local militia, the majority of fatalities are civilian.
Among the fatalities, 129were teachers and 219 were doctors or other technical
and professional workers, while 644 were students. A total of 7,196victims (29.3
per cent of the total) were 20-years old or under. (Ibid., p. 8.) More than 10,000
Nicar~tguünchildren have been orphaned by the war. (Ann. 1.2h, p.20.)
95. As to material damage, Annex 1.2h shows that property to a value of
$221.6 million was physically destroyed from 1980 through 1987. Production
losses for the same period came to$984.5million, for a total of $1,206.1 million.

(Ihirl.,p. 4.) The figure for production loss is, of course, several times largcr than
the value given for property destroyed. The smaller figure represents only the
replacement cost of capital assets. But to this value of the physical asset must be
added the loss of future income from that asset, which in every case will be many
times the book value. As shown above. both physical damage and production
loss were routinely reported through the data collection system. The totals are
generally confirmed in the 1987ECLAC study of the Nicaraguan economy. (See
excerpts in Ann. V, p. 10.)
96. An annual breakdown appears in Annex 1.2b, page 9, and in the ECLAC
document (Ann. V, p. 10,Table 25). Agriculture and forestry accounted for 71.2
per cent of the total production losses with another 19.1per cent in construction.
(Ibid., p. 9.) Physical destruction of property is analysed by economic sector and
institutions.(Ihicl.,pp. 10-15.)266 MILITARY AND PARnMlLITARY ACTIVITIBS

97. As shown above, both physical damage and production loss wereroutinely
reported through the data collection system. In the agricultural sector. production

lussesinclude those due to land that coutd not be cultivated becauseof miljfary
operations.

Section E. Calculation of the Quantum of Reparation the United States is
Obligated to Pay as Measuredby the Damagesta PersonsandProperty
Resulting fromthe Military and Paramilitary Activities

98. Although as shown in Chapter 9 (paras. 421-424), the date from which
damages should be calculated is not iater than 1 December 1981. only annual
data is presented in Annex 1.2 h. Since the damage in the last month of 1981 is
relatively small, Nicaragua bases its claims in this phase of the proceedings on

the figures for the period 1January 1982to 31 December 1987.
99. On this basis, the computation of the amount of reparation owingin respect
of damage to property is straightfonvard. The tables in Annex 1.2b, page 9,
summary Annex VI.1, Table 2,page 3, show that, for the years1980 and 1981,the
physical damage to property totalled $4.5million;incithe production loss Cameto
$4.4 million. Subtracting these amounts from the totals shown at the foot of the
table gives the following figures for the period 1 January 1982 to 31 December
1987(see Ann. 1.2b. p.9 and the summary in Anri.VI.1,p. 3, Table 1).

Physicüldamage .................................... $21O14nU,0O '0
Loss of production .................................. 980,100.000
Tora( .............................................. $1,190,500,000
100. Similarly, casualty figures for the relevant period may be calculated by

subtracting the 1980 and 1981 figures from the table in Annex 1.2b, page 17,
Table 11.1.The resulting totals for "nuestro pucblo" for the period I January
1982to 31 December 1987are:
Killed .................................................. 6,712
Wounded .................................................. 10,521
Missing .................................................... 7,222

101. There is a difficultyin assigning dollar values in each of these categories.
Nicaragua has no evidence to show the length of time for which persons listed
as missing wereabsent from their homes. In some cases, the exact circumstances
of missing person reports in war zones are not clear. Similarly, although there is
soitie itiformation about the seriousness of the injuries to the wounded. there is

not enough detail to provide a comprehensive statement of the medical costs and
loss of work due to those injuries. Annex 1.6 contains the available information
on the severity of those permanently disabled as a result of the war among
Nicaragua's military.Although incomplete,it documents, interdia,458amputees.
395 pcrsons vilhohave lost the use of at least one limb and 193who have been
totally or partially blinded. It givesinformation for almost 2,000çoncrete cases2.
In addition to the military cases, the National lnstitute of Social Security and
Welfare (INSSBI) has given benefits to an average of over 2,000 civilians
handicapped by the wür aiitiually. On the basis of this intbrniation, it is cleür

'The daim in the total for physical damage inhis less the U.S.$6.6 million included
in the system as the initial estimforthe specificattackcitedinthe Dispositif. Those
at-A few of these cases are from the periods 1978-1979and 1980-1981. that more than 4,000 people have receivedpermanent handicaps due to the war
(see Ann. 1.6,p. 1and Ann. IV.5,p. 8).
102. The statistics on the number of pecsons killed are, in Nicaragua's
submission, highly reliable. On the other hand, as is shown in Section B of this
chapter [Modalities for Human Loss], paragraph 59, supra, the usual criteria for
measuring damages for wrongful death in international disputes - such as loss
of earnings ar pension costs - are inapplicable in Nicar.agiia, a developing
country with a large subsistence economy. Nicaragua kas therefore suggested,
paragrapli 71, supra, that any reparation in respect of lossof life must be a
conventional figure.
103. To provide some basis for judgment as to the size of such a figure,
Nicaragua presents the following information about damages assessed in some-
what comparable circumstances :

104. Benin: On 26 January 1977, Benin complained to the United Nations
Security Council concerning a commando attack carried out against Cotonou
on 16 January 1977. Pursuant to Security Council resolution 405 of 14 April
1977,the Secretary-General appointed "a teatn of expert-consultants ...to assist
the Government of Benin inevaluating the damages resulting from the act of
armed aggression çommitted at Cotonou on 16 January 1977". After a careful
study, the expert-consultants concluded that 7 persons had been killed and 51
wounded in the attack. They estimated the damages attributable to these injuries
at 112million CFA, which converts to a total of US$40million. (See Conseil de
sécurité,Doclunenrsufficirls.S/12294/Rev.1.)The relevant United Nations docu-
ments have been deposited with the Court. (See Dossier: "Pratique du Conseil
de sécurité desNations Unies en matière d'évaluationde dommages", for this
case and that of Botswana, para. 105.)
105. Botsii.uriaOn the morning of 14 June 1985,a grnup of South African
special forces carried out an attack against Gabarone. Botswana, in which 12
people were killed. Ina letter of the samedate, Botswana requested the assistance
of the Security Council in this matter. In resolution No. 568. adopted the same
day, the Security Council directed the Secretary-General. inter uliu,"to send a
mission to Botswana to . . evaluate the damages caused by the premeditated
and unprovoked aggressiveacts committed by South Africa; ...".In its report,
the specialniission evaluated the damages in respect of the deaths at US$118,000
per person. Seven persons were wounded in the attück, for which the mission
evaluated the total damages at $US419,800, or $US69.971 per person. (See
Conseif de sécuritéD , ociimerrtsoficiels, S/17453.)
106. Further? in a dispute involving the same States that are parties in the

present case, Nicaragua paid indemnification for the deaths of two United
States citizens. In November 1909,the government of President Zelaya executed
IWO United States çitizens for a crime alleged to have been committed in the
course of an attempt. in which the United States wüs involved, to overthrow
the Government of Nicaragua. The United States protested and severed dip-
lomatic relations with Nicaragua in a note from Secretary of State Knox dated
1 December 1909. Thereafter, Zelayü resigned and the successor govzrnment
ztgreed to the establishment of a mixed clairns commission, which, in March
1918,awarded the sum of $20,000for the two deaths. The present valueof these
awards as calculated by Nicarügua comes to $50,000 per person. The relevant
tlocumentation is in Annex XI.
107. In the las[ analysis, it isimpossible to put a money value on human life.
It is especiallyhard for a State to suggest a figureto compensate for the livesof
its citizens.Nor is itvery easy for the Court to make such a calculation.268 MILITARY AND PARAMILITARY ACTIVITIES

108. Therefore, because of the dificulties both tnoral and economicof calcula-
ting damages for persons killed, wounded and missing on a case-by-casebasis,
Nicaragua has decided to request the Court to make a lump-sum award of
reparation for al1the injuries to persons resulting from military and paramilitary
activitiesn the relevant period.
109. Having regard to the number of casualties, the economic consequences
of their injuries and deaths to the State, the assessmentsthat have been made in
the past and the gravity of the internationally unlawful acts found to have been
committed by the United States, Nicaragua believes that a substantial sum is

warranted. On this branch of the claim Nicaragua submits that the United States
should be required to make reparation inthe amount of $900 million.
110. The total of Nicaragua's claims for darnage to persons and property
resulting from the unlawful conduct of the United States in "training, arming,
equipping, financing and supplying the contra forces ..." as found in subpara-
graphs (3) and (4) of the Dispositif and the related portions of the Judgment
on the Merits (but apart from the losses caused by the specific attacks and
mining of harbours and excluding lossescaused to the development potential of
Nicaragua) is as follows:

Destruction of property ............................... $210,400,000
Production loss ....................................... 980,100,000
Lump-sum reparation in respect of persons killed, wounded
and missing ........................................ 900,000,000
Tntu1 ............................................. $2,090,500,000 CHAPTER 3

REPARATIONFORTHESPEClFIC ATTACKSAND MINING OF
HARBOURS

111. This chapter deals with injuries arising from particular acts of force by
the United States against Nicaragua. It sets forth the basis of the legal obligation
on the part of the United States to make reparation for these injuries, describes
the methodology employed by Nicaragua in calculating the value of the damage,
introduces the evidence of loss and injury that has been submitted to the Court,
and States Nicaragua's claim for monetary compensation ',
112. In addition to arming, training, equipping, financing and supplying
the contras, the United States itself committed acts of physical violence against
Nicaragua. The Court found that on seven separate occasions, it conducted
armed attacks on port installations. As the Court noted, "agents of the United
States participated in the planning, direction, support and execution of the
operations". (Merits, para. 86.) The operations are therefore imputable to the
United States, and were so recognized by the Court. (Ibirl.) The extensive
property damage çaused by these attacks is described in Annex II of this
Memorial. (See Ann. 11.2 b, pp. 9-15.)
113. The mining of Nicaraguan harbours is also attributable to the United
States. Those who actually placed the explosivedevices in the waters in and near
the ports of El Bluff,Corinto and Puerto Sandino were, as the Court found, in
the pay of the United States and acting under its instruction and supervision

and with its logisticalsupport. (Merits, para. 80.)The United States contemplated
and intended that the mining would have serious harmful eirects. In a document
disclosedduring the course of the Iran-Contra Hearings conducted by the United
States Congress, National SecurityCouncil StaffMember Lt. Col. Oliver L.North
reported to then National Security Advisor Robert McFarlane that "Our
intention [in mining the harbours] is to severely disrupt the flow of shipping
essentialto Nicaraguan trade during the peak export period .. [and] to further
impair the already critical fuel capacity in Nicaragua". (Memorandum of North
to McFarlane, Ann. X, Attaçhment C-1.)Thesedestructive purposes wererealized
in the substantial injuries suffered by Nicaragua as a result of the mining; those
injuries are described more precisely inAnnex, 11.3b.
114. In the Dispositif of its Judgment on the merits, the Court decided:

"that the United States of America, by certain attacks on Nicaraguan
territory in 1983-1984,namely [the attacks on ports interaliu], has acted
against the Republic of Nicaragua. in breach of its obligation under cus-
tomary international law not to use force against another State .. ." (Dis-
positif, subpara.(4), Merits);

'Nicarügua's clah inthischapterislimitedtocompensationformaterialdamagecaused
hy theseunlawfulspecificactionsof theUnitedStates.Thehumaninjuriesoccurringas a
result ofthose actions,see,e.g., Merits,para76, are accountedfor in the DINFORS
study, whichanalysedand calculated thecosts of the totalUnitedStatesmilitaryand
pariimilitaryactivitiesinand againstNicaragua,andwhichservesaa basisfor Nicaragua's
claiminChapter 2, supru.270 MILITARY AND PARAMILITARY ACTIVITIES

"[and] that the United States of America, by [the attacks on ports] has
committed acts calculated tu deprive of its object and purpose, the Treaty
of Friendship, Commerce and Navigation between the Parties signed at
Managua on 21 January 1956 ..." (Dispositif. subpara. (IO), Merits);

"[aiid] that the United States of America, by [the attacks on ports] has
acted in breach of its obligations under Article XIX of the Treaty ..."
(Dispositif. subpara. ( 11),Merits).

The Court also decided

"that, by laying mines in the internai or territorial waters of the Republic
of Nicaragua during the first months of 1984,the United States of America
has acted against the Republic of Nicaragua in breach of its obligations
under customary international law not to use force against another State,
not to intervene in its affairs, not to violate its sovereignty and not

to interrupt peaceful maritime commerce ..." (Dispositif, subpara. (6),
Merits) ;

"[and] that, by [mining the harboursj, the United States of America has
acted against the Repubiic of Nicaragua in breach of its obligations under
Article XIX of the Treaty of Friendship, C:ommerceand Navigation ..."
(Dispositif, subpara. (7), Merits).

In a later portion of the Dispositif, the Court stated the normal consequence
of these illegal actions under international law:

"the United States of America is under an obligation to make reparation to
the Republic of Nicaragua for al1injury caused to Nicaragua by the breaches

of obligations under customary international law ..." (Dispositif, sub-
para. (13), Merits) ;

"[and] the United States of America is under an obligation to make
reparation to the Republic of Nicaragua for al1injury caused to Nicaragua
by the breaches of the Treaty of Friendship, Commerce and Naviga-
tion . . .(Dispositif, subpara. (14), Merits).

115. Chapter I of this Mernorial establishes that the reparation owed by a
State in breach of an international obligation must be "effective"; that isi it must
"wipe out al1the consequences of the illegal act". (See Chap. 1,para. 40, strpm.)
The primary remedy isthe "re-establish[ment] of the situation as it existedbefore
the [unlawful] act". (Art. 6, draft articles on State Responsibility, Part II, in

Yeurbook of tlie Ititernutionul Luiv Conimissioti. 1984, II (Part One)? p. 3: see
also Chap. 1, paras. 28-34, supru.) In cases where that remedy is not possible,
however, the offender is obliged to "pay ...a sum of money corresponding to
the value which re-esrablishment of the situation as it existed before the breach
wnuld hear". (Art. 6. para. 2, of draft articles on State Responsibility, Art. 6,
para. 2, in Yearhoook f the Interrrntiona!Lait.Comnlissian, 1984, Il (Part One),
p. 3.) This approach refiects that adopted by the Permanent Court in Facactory
ut Chorajiv, 1928,P. C. 1.J.,Series A. No. 17, page 47 :see also Chapter 1, para-
graph 28> supra.
116. One measure of compensation for liability of this kind is the replacement
value of property Iost and the repair cost or diminution in value of property damaged '.This meaçure, in the language of Factory utChorzciw,"çorrespol~d[s]
to the value which a restitution in kind would bear" (P.C.I.J.,Serir.~A, No. 17,
p. 47). The same measure was used by the Court in the Corf uhannelcase. (See
Chap. 1,para. 34 and Chap. 2,paras. 75-76, supra.)
117. The specific acts of force with which this chapter is concerned resulted
in substantial damage to property and, with respect to mining the harbours, loss
of income. In order to present an accurate claim for this injury, Nicaragua

directed the lnstituto Nicaraguense de Seguros y Reaseguros (INISER) to pro-
duce an accounting and valuation of the damage. This project involved two
distinct tasks; identifying the property that had ken lost or damaged, as well
as special expenses incurred because of the attacks; and açcertaining the correct
value of each item for reparation purposes. In the INISER study, both tasks
were carried out by trained professionals who are experienced in the business of
insurance adjustment. (See Affidavit of Dr. Leonel Arguello Ramirez, Ann. 11.1
and Aftidavit of Mr. Horacio S. Raudes Sevilla,Ann. 11.2.)
118. identification of the damaged property was üccomplished by means of
visits to the ports themselves, supplemented by personal interviews with those
knowledgeable about the incidents, and data provided by the institutions affected
by the attacks. (See Ietters of Dr. Arguello Ramirez and Mr. Raudes Sevilla,
Ann. 11.3b, pp. i-iii.) These procedures are fully consistent with the practices of
the insurance industry when the effectivenessof on-site inspections is diminished
because of a lapse of time between the incident and its assessment. (See ibid.)
119. The actual valuation of property lost or damaged by the attacks was also
performed according to standards established and adopted by the insurance
in'dustry.For lost items, INISER calculated the replacement cost in the year in
whiçh the loss occurred. Similarly, for damaged items çontemporaneous repair
cost has been calculated. (See ibid.)

120. The Report issued by INISER is submitted to the Court as Annex 11.36.
In Nicaragua's judgment, this Report provides a reliable and fair representation
of the monetary values of the darnage caused by the actions of the United States
in attacking Nicaraguan ports and mining Nicaraguan harbours.
121. As compensation for the attacks on ports and rnining of harbours -
both violations of international law for which, according to the Judgment,
Dispositif subparagraphs (13) and (14), Merits, the United States must make
reparation - the Government of Nicaragua claims the following sums :

For the attacks on Puerto Sandino
on 13 September and
on 14October 1983: US$410,000.00
For the attack on Puerto Corinto
on 10October 1983: 6,054,878.24
For the attack on Puerto Potosi
on 4 and 5 January 1984 :
2,746,000.00
For the attack on San Juan del Sur
on 7 March 1984 : Not quantified *
For attacks on boats at Puerto Sandino
on 28 and 30 March 1984: Not quantified *

'Oiher measures includethe costsincurredto immediatelyconfrontthe illegalaction
(fire-fighting.etc.), consequentiallosses,violaofosovereignty,and moral damage,
among others.272 MIL~TARY AND PARAMILITARYXCTIVITIES

For the attack on San Juan del Norte
on 9 April 1984 : Not quantified *
For the mining of Nicaragua11harbours

in early 1984 : 5,750,000.00
Totalreparation for property damage due to specific
attacks and mining of harbours: US$ 14,960,878.241

'Quantificationwas not possible in these cases dueto the nature or amooftthe
damage done.

'This figure represents Nicaragua's claim for damages in compensation for material
injury. T'e significance of the specific attacks and mining of harbours as violations of
Nicaragua's sovereigntyis discussedin Chapter 7, infrT.he claim is placed at present
valuein the final submission according to the methodology and calcuiations presented in
Annex VI.2. CHAPTER4

THE SECURITYAND DEFENCE COSTS RESULTINGFROM THE
UNLAWFULCONDUCTOF THE UNITEDSTATES

A. Introductio:Thewnciple

122. In the opinion of the Government of Nicaragua justice and ordinary
logic require that the assessment of reparation extend to the security and
defence costs resulting from the unlawful conduct of the United States.
The impact of the military and paramilitary operations on the disposable
resources of Nicaragua bas been and continues to be substantial. It is obvious
that the diversion of resources available for economic development to the
purposes of defence must have adverse effects,not least for an economy of the
Nicaraguan type, with an extreme shortage of foreign exchange,food, clothing
and fuel, on the one hand; and no arms industry, on the other. (See Chap. 5,
Sec.'A.)
123. It is clear that the costs of responding to the threats to Nicaraguan

security posed by the activities to which subparagraphs 3 to 9 inclusiveof the
Dispositif ofthe Judgment on the Merits relate quite naturally within the concept
of effectivereparation generally recognizedby the sources of international law
and adumbrated in Chapter 1 of the present Mernorial.
124. There is evidenceof a general recognition in the practice of States that
the victirnof an unlawful resort to force has a claimfor adequate compensation
for the cost of reasonable rneasures of self-defence:see Brownlie, International
Law ond ~heUse ofForce hy States,1963,pages 147-148.Thus, for example, the
Geneva Protocol of 1924stipulated (in Art. 15) that the expense of repressing
aggression in accordance with its provisions "shall be borne by the aggressorup
10 the extreme limits of its capacity". It is true that the Protocol did not enter
into force, but there is no reason to doubt the opinjorisrepresented in this
expressionof the point of principle.
125. Following the Greco-Bulgarian frontier incident of 1925 the Com-
mission of Inquiry appointed by the Council of the League of Nations rec-

ommended that in fixing the reparation due to Bulgaria "it would seem that
ztccount must first be taken of the cost of the military measures which the
Bulgarian Government was cornpelledto take": see the pertinent section of the
Report as reproduced in Hackworth, Diges tf Intcrnationul Law, U.S.G.P.O.,
Washington, II, pages 1372-1376 at page 1373.
126. The recovery of the necessary costs of maintaining security against
external attack and of responding to the orchestra of military and paramili-
tary operations for which the United States is responsiblein international law is
simply a particular exampleof the application of the principle of liabilityfor al1
the actual consequencesof unlawful conduct. The case isanalogous to the claims
relating to harm caused by pollution for which aState is responsible.Suchclaims
naturallyextend to the costs entailed in removing the source of harm. The
principle concerned was applied by the Canadian Government in presenting its
claim to the USSR for damage caused by the disintegration overCanada of a
Soviet space object, the Cosmos 954 satellite, and the deposit on Canadian
territory of hazardous radioactive debris from the satellite.274 MILITARYAND PARAMILITARYACTIVITIES

127, The Canadian claim was based both upon Article II of the Convention
on International Liabilityfor Damage caused by Space Objectsand upon general
principles of international law. The relevant paragraphs of the Statement of
Claim annexed to the Canadian Note of 23 January 1979read as follows:

"1 8. The operations described inparagraph 8 above would not have been
necessary and would not have been undertaken had it not been for the
damage caused by the hazardous radioactive debris from the Cosmos 954
satellite on Canadian territory and the reasunable apprehension offurther
damage in viewof the nature of nuclear contamination. As a result of'these
operations, the areas affected have been restored, to the extent possible, to
the condition which would have existed ifthe intrusion of the satellite and
the deposit of the debris had not occurred. 'TheDepartments and Agencies
of the Government of Canada involved in these operations incurred, as a
result, considerable expense, particularly with regard ta the procurement
and use of services and eqiiipment? the transportation of personnel and
equipment and the establishment and operation of the necessary infrastruc-

ture. The costs included by Canada in this claim were incurred solely as a
consequence of the iiiirusion of the satellite into Canadian air space and the
deposit on Canadian territory of hazardous radioactive debris from the
satellite.
19. In respect of compensation for damage caused by space objects, the
Convention provides for '.. such reparation in respect of the damage as
will restore... [the claimant] to the condition which nrould have existed if
the darnage had not occurred' (Art. XII). In accordance with its Preamble,
the Convention seeks to ensure '... the prompt payment ...[under its terms]
of a full and equitable measure of compensation to victims of such damage'
(Fourth preambular para.). Canada's claim includes only those costs which
were incurred in order to restore Canada to the condition which would have
existed if the damage inRictedby the Cosmos 954satellite had not occurred.
The Convention also provides that 'The compensationwhich the launching
State shall be liable to pay for damage under this Convention shall be
detemined in accordance with international law and the principles ofjustice
and equity .. .'(Art. XII). In calculating the compensation claimed, Canada
has applied the relevant criteria established by general pririciples of inter-
national law and has limited the costs included in its claim to those costs

that are reasonable, proximately caused by the intrusion of the satellite and
deposit of debris and capable of being calçulated with a reasonable degree
of certainty ...
21. The intrusion of the Cosmos 954 satellite into Canada's air space and
the deposit on Canadian territory of hazardous radioactive debris from the
satellite constitutes a violation of Canada's sovereignty, This violation is
established by the mere fact of the trespass of the satellite, the harmful
consequences of this intrusion, being the damage caused to Canada by the
presence of hazardous radioactive debris and the interference with the
sovereign right of Canada to determine the acts that will be performed on
itsterritory. International precedentsrecognizethat a violation of sovereignty
gives rise to an obligation to pay compensation." (Brownlie, System of the
Laiv ofNations: Srute Responsibility, Part 1, 1983,p. 97 (Note) and p.277
(Annex).)

128. The anteçedents thus jiistify the submission of the Government of
Nicaragua that the liability of the United States to compensate Nicaragua for
the necessary expenditure on external defence and the maintenance of security in face of a constant threat of violence directed against both its armed forces
and its population generally, flowsfrom the application of the normal principles
relating to the provision of effective reparation. After all, the responsibility
arising from the unlawful use of force, intended, as the Court has recognized
(I.C.J. Reports 1986, pp. 57-59,paras. 97-99; p. 133,paras. 263-2651,to pursue
objectives which wereillegalab initio, entails reparation for consequences which
were intended. and is thus an afirtiori case when compared with the unintended

consequences of the disintegration of a satelfite.

B. ThePeriod for Which Reparation Must Be Calculated

129. The elements of this question will be Chapter 9.

C. Calculation of the Quantum of Reparation

130. The expenditures on defence and security that the Government of
Nicaragua has been obligedto undertake increased sharply after 1982due to the
escalation ofarmed attacks by personnel acting under the direction of the United
States Government on ports and harbours, and the escalating actions of the
cnntrrr forces in killing Nicaraguan nationals and destroying property [Refs.
Anns. 1 and II; and chronology]. The following paragraphs set out a sound
method for establishing the additional costs incurred.
131. The expenditure by the Government of Nicaragua on defenceand security

(rseeAnn. 7.2 for the budget figures!and the affidavit of the Minister of Finance
in Ann. 7.1 )between 1980and 1982had been relatively modest, averaging some
US$157 million a year. However, the defence plans made immediately after the
initial attacks in 1981 had to be adjusted iipward due to escalations in the
aggression in 1982and especially in 1983 in which military and paramilitary
~ittacksincreased in both number and importance (for example, the attriçks on
the ports). Thus defence expenditure in 1983represents a 53 per cerit increase
over that for 1982.
132. The claim of Nicaragua for defence costs necessitated by the unlawful
activities of the United States is based upon the increase of expenditure in this
category taking the years 1980to 1982as the standard of comparison. Since the
aggression in fact began during this period this standard isinevitably conservative.
The basis of comparison is thus the average annual expenditure in United States
dollars between 1980and 1982(described as"Hypothesis 1"inAnn. VII.2b, p. 2).
133. This is the methodology preferred by the Government of Nicaragua and
it may be of assistance to the Court if attention is drawn to other methods of
assessrnentwhich have been laid aside. A ratio of expenditure to Gross Domestic
Product ("Hypothesis II". /oc.cit.) would be valid if an internationalcomparison
between economies of different sizes were to be made; rather than, as in these
proceedings, a compürison between different periods for the same country.

Moreover, infact the value of this ratio for the 1980-1982period in Nicaragua
is7.3 per cent (Ann. 7.2,Table l), which is actually below the 1979-1983average
of 8.5 per cent for less-developed countries estimated by S. Deegar (Milirury
E~.rpeiirliiie ThirclWorldColrntrirs:the Eronomic Effkctu,Routledge & Keegan
PüulL ,ondon. 1986: Table 1.3, p. 25). This is despite the fact that Nicaragua
was reconstructing its armed forces after the defeat and dismantling of the
National Guard in 1979.276 MILITARYAND PARAMILITARY ACTlVITlES

134. Indeed the share of defence and security expenditure in the total govern-
ment budget ("Hypothesis III" in Ann. VII.2. p. 1) stood at 21 per cent on
average between 1980 and 1982(Ann. VII.2, Table 4).This proportion is only
slightly higher than that obtaining before the present administration came into
power, when the budget share between 1976 and 1978 of the National Guard
was on average 20 per cent of the total government budget (Inter-American
Development Bank, Nicaragua: Ii!formeEconomico (Re$ GN 1271)Washington,
DC, July 1983 ;Table II).
135. Therefore, in order to provide a sound estimate of that part of the
defence and security budget attributable to increased effortsby the Nicaraguan
Government to defend itself and its citizens against the unlawful activitiesof the

United States the most appropriate method is as follows. An average figurefor
the combined budgetary allocation to the Ministry of Defence and the Ministry
of the Interior has been established, in United States dollars, for the years
1980-1982(see Ann. V11.2). The budgetary results for the same category of
expenditure in the years 1983 to 1987 are then compared to this baseline of
"normal" expenditure, the difference being "excess" expenditure to which the
claim relates.
136. TheCourt's attention isrespectfullydrüwn to the füctthat those budgetary
figures do not include Foreign military assistance, nor the voluntary efforts of
local militias, defence of cooperative farms, etc. However, the figuresdo include
expenditure on civilian policing, but as this did not increase significantly after
1983, it would not affect the estimates of excessexpenditure.

137. On this basis the costs of defence relating to the unlawful activities of
the United States emerge clearly from the following figures provided by the
Nicaraguan Ministry of Finance (Ann. 7.2, Table 3) and corroborated by the
UN/ECLAC (Ann. 5, p. 9, note 22).
Nicaragua : Defence and Security Expenditure in the Government
Budget (in US$)

Actlild iV0rmd E.rce$s

1983 277,900.000 157,200,000 120,700,000
1984 310,100.000 157,200,000 152,900,000
1985 384,300,000 157,200,000 227,100,000
1986 400,900,000 157,200,000 243,700,000
1987 464,400,000 157,200,000 307,200.000
Tora/ 1,0513600,000

The claim for compensation in respect of excess defence expenditure is
therefore : US$1,O51,600,000. CHAPTER5

LOSS CAUSED BY THE GENERAI,EMBARGO ON TRADE

137 /bis/. No matter how great the injury caused to Nicaragua by the

internationally wrongful acts of the United States examined in previous chapters
may be,this does not exhaust the loss caused. In fact, each of these categories
of harm has had in turn direct repercussions upon the economy of Nicaragua as
a whole which has also been harmed by the general embargo or1trade with
Nicaragua announced by the President of the United States on 1 May 1985.
138. This chapter is devoted to the loss caused by the trade embargo, while
Chapter 6 presents the consequential loss caused to Nicaraguan development
potential in general as a result of the unlawful acts dealt with in this and previous
chapters of this Mernorial.
139. However, the importance of these elements of loss cannot be understood
without a briefoverview ofthe general characteristics of the Nicaraguan economy,
the weakening of which constitutes one of the main instruments by which the
United States has intervened in Nicaraguan affairs and in effect attempted to
overthrow the present government.

Section A. GeneralCharacteristicsof the NicaraguanEconomy

140. The object of this section is to outline the main characteristics of the
Nicaraguan economy in so far as they have a bearing upon the consequençes of
the illicit actsthe United States for which Nicaragwdis claiming compensation
before the Court. The vulnerability ofthe economy is established in paragraphs
141-144and the progress towards economic reconstruction achieved before 1982
described in paragraphs 145-149.The reorganization of the economy in order to
permit the survival of the populationunder the conditions of intense attack from
1982 onwards is outlined in paragraphs 150-155. This background is pro-
vided in order to assist the Court to appreciate the seriousness of the policy of
econornic destabilization adopted by the United States Government.
141. In 1979, when the Revolution took place, Nicaragua had a population
of 2.5 million, with a growth rate o3.3 per cent and infant mortality of 120per
thousand live births. Population density was 19.2 per square kilometer on the

overall area of Nicaragua (130thousand square kilometers) and 51.1 per square
kilometer of arable larid. The country had a per capita GDP calculated at
US$720 by the World Bank (see World Bank, Nicaragua: The Challenge of
Reconstrtrction,Report No. 3524-NI; Washington, DC, October 9, 1981, p. 1 ;
other data in this paragraph corne from the same source) derived from a basically
agricuttural economy based on largely unprocessed export comrnodities (coffee,
sugar, bananas, meat, etc.) and other natural resource products (marineproducts,
mining and timber) ;a staple food sector (maize, beans, sorghum and rice), and
an incipient manufacturing sector relianton imported raw materials and United
States technology for its operations.
142. Muçh of the export production of Nicaragua takes place in zones that
were to be subsequently affected by contraaction. Specifically,coffee is mainly
produced in the northern regions 1 and VI (Esteli, Matagalpa and Jinotega),
while meat comes from Region V (Boaco, Chontales), and marine products,278 MILITARY AND PhKAMILlTARYACTlVlTIES

precious metals and timber from the Atlantic Coast. Two basic foodcrops for
the population - maize and beans - also came from the mountainous
northeastern zones where fighting has also been intense. In other words, it
is agriculture in particular. and primary production generally, that is most

affected by the war (see Ann. 1.2h). Of the major agricultural products, only
sugar. cotton, sorghum and rice are mainly grown on the Pacific plains; while
manufacturing is typically concentrated in the cities, partiçularly Managua.
143. The Nicaraguan economy is very exposed to foreign markets in the sense
that imports and exports make up an extremely high proportion of its gross
domestic product. In normal times, half of material output is allocated to exports
and similarly. about half of' total supply is imported. If the "external trade
coefficient" is defined as the ratio of the mean of exports and imports to Gross
Domestic Product (GDP); then the value of this coefficientwas 37 per cent in
1977.32 per cent in 1981. However, by 1983 this ratio had fallen to 20 per cent
and by 1986 to 15 per cent under the pressure of falling export receipts and
limited external credits (see ECLAC, AnnuulReports, various years). Despite this

forced reduction in the "trade coefficient", the critical role of imports in key
areas such as energy (half of electricity output relies on imported fuel),
manufacturing export, agriculture and transport make the economy highly
vulnerable to foreign exchange shortags.
144.The external trade of Nicaragua is handled predominantly through two
ports situated on the northwesternCoast :Corinto for dry cargo and Puerto Sandino
for crude oil. In 1984,for instance(se [nstituto Nacional de Estadistica y Censos,
AnicurioEstudi~c1i 954,Managua, 1985,p. 85) some 96 per cent of Nicaragua's
total export volume of510,000totines of exports went through Corinto, as did 61
per cent of the 1.475 million tonnes of imports. Much of the remainder was
accounted for by the 35 per cent of liquid (Le., oil) imports by weight corningin
through Puerto Sandino. ln other words. the entire economy was extremely

dependent upon two ports with fragileinfrastructure arid littlernilitarydefence.
145. The war against Somoza in 1978-1979,which had closely followed the
earthquake of 1972,left the economy in ruins. As the World Bank pointed out
(op. cit.p. i):

"i. The struggle which ended withthe overthrow of the Somoza régime in
July 1979 was extremelycwtly for Nicaragua. Ttseriouslydamaged the nation's
productive capacity and led to huge financiai losses. The massive flight of
capital and later drops in exports led to a severe foreignexchange shortage.
The destructionof factoriesand inventoriesand the loss ofmanagerialpersonnel
brought about a contraction of industrialactivity.Agncultural output was also
affected by the war and its aftemath, although not to the same extent as
industry. There was a sharp declinein the output of cotton and basic grains
and, moreover, the slaughter of immature beef cattk and the smugglingof
herds out of tlie country seriously jeopardizedbeef production for the coming
years. There is no doubt tliat the Nicaraguiin economy suffered a severe
setback; the income foregone during 1978-1980surpassed US32.0billion."

146. The medium-terrn econoinic and social objectives for the reconstruction
period which was expected to last at least five years, were set out by the new
government of National Reconstruction in the 1980 Economic Programme
(Ministerio de Planification. Prog~ffrna & R~wri~wciunEccinorniru rn Bencr/irio

clelPtieblo,Managua. December 1979)and identifiedas four (op. cit.,pp. 11-15):
(a) reactivation of the economy "to the benefit of the people", favouring the
basic needs of the poorer groups and limiting luxury consumption; MEMORIAL (COMPENSATION) 279

(h) cteation of a dynamic and democratic State that could bring about the
necessary social reforms ;
(c) strengthening of national unity between the new government, the working
people and private enterprise ;
(cl) initiation of the transition towards a more just and equal society.

147. In fact. considerable progress was made in attaining those goals between
1979and 1983. According to the responsible United Nations agency (ECLAC,
Notas priraeIEstudio Economicode Amcricu Lutina y r.Carihr, 1982: Nicurag~la,
Mexico City, 1983)GDP had fallen by 33 per cent between 1977and 1979,but
had grown by 20 per cent in 1980and 8.5 per cent in 1981.The ECLAC noted
(op. cit.p. 1) that in the 1979-1982period

"the economy evolved in a relatively dynamic fashion, achieving advances
in the redistribution of income and starting social programmes which
benefited wide sectors of the population"

although extemal factors were generally negative :"as in the rest of the regio-
the notable deterioration in the external terms of trad. .(and) ...climatological
factors" affected exports and led to a decline in GDP of 2 per cent in 1982.
148. The social reforms carried out during the 1979-1982period were consider-
able, particulatly the literacy campaign (which reduced illiteracy from 53 per
cent to 13 per cent), public health services, land reform. self-help housing, social

welfare programmes, community organization andthe extension of basic services
such as electricity and drinking water to large sectors of the population (see
'r.W. Walker, ed., Nicaruguo: the FirstFive Years,New York, Praeger, 1985).
149. Evafuations by international financial agencies such as the lBRD (op.
cit.) and the Inter-American Development Bank (BID. Informe Econnnlico:
Nicarqua, Washington, DC, 1983) were generally positive. Criticisms of short-
comings in the macroeconomic policy of the Nicaraguan Government were
essentially concerned with the high level of expenditure (on social senrices and
public investment) and the multiple exchange-rate system, which generated
inflationary pressures. As aresult, both the International Bank for Reconstruction
and Development (IBRD) and the Inter-American Development Bank (IDB)
made optimistic forecasts of Nicaragua's development potential in general and
the growth of exports and GDP in particular (see Ann. IV.2); with at least a
doubling of export income and growth rates of between 3 and 6 per cent per
annum in GDP over the rest of the 1980s.
150. After the 1981 military and paramilitary attacks on infrastructure and

production facilities increased leading to considerable economic losses in 1982
(some US$32 million according to ECLAC, Notas puru PIEstudio Econumiro dr
Americu Llitin u el Caribe. 1987 - Nicartcgzru,Mexico City, 1988; Table 25,
p. 63). However, the losses from contra action intensified markedly in 1983
(US$165 million, Ir~c.cil.a) nd between 1984 and 1987 averaged some US$236
million a year in material damage and immediate production losses from crops
destroyed, fishing boats prevented from fishing?etc. Between 1983and 1987,
those losses (discussed in detail in Chap. 6 below) werc equivalent to up to one-
half of export income.
151. In consequence, the Nicaraguan Government was forced ta shift towards
a "survival ecunomy" where priority was placed upon supporting the military
mobilization effort (which was consuming an inçreasing share of national
resources - already explained in Chap. 4 above) and the basic consumption of
the population. Nicaraguan economic programmes from 1983onwards stressed
austerity and the need to reduçe social expenditure and investment in order torelease reçources for defence. Despite those efforts, the overall financial deficiof
the public sector expanded, generating continuing inflation and food shortages
(see E. V. K. Fitzgerald, "Financing a Revolution: Accumulation, Defence
and lncome Distribution in Nicaragua 1979-1986", in E. V. K. Fitzgerald and

R. Vos, eds., FinanciirgDevelopnle~zfa : StructuralistApprouc/lIoMonetary Policy
itzthe Third World,London, Gower, 1988).
152. The effect of export income losses from contruattacks was compounded
by the United States trade embargo in 1985and led to a severe reduction in
GDP per capita in every year from 1984onwards :the indiçators fell by a cumu-
lative 18 per cent between 1983and 1987(ECLAC, op. ci!.,Table I, p. 39). The
war and the macroeconomic disequilibrium (see Ann. IV.2) led to deteriora-
ting social conditions as well (see Ann. lV.5), causing infant mortality and
illiteracy torise once more after the notable successesof 1979-1982.In the words
of the regional United Nations agency :

"Numerous mutually-contributing factors explain this dificult situation.
lt is not easy to define their order of importance or appearance. Some of
the extra-economic ones - such as the armed confrontation with its driirnatic
consequences in human and material losses - have been present for several
years and may even be considered permanent. Their negative effects have
an increasing impact on the crisis, obstructing the efforts of the authorities
to face them and define the economic policies necessary to attenuate them.
When analysing this crisis. one should not lose sight of the fitctors that
limit development and are cornmon to almost al1Latin American economies
(be they structural or specificto the crisis of the 1980s).In the case of Nica-

ragua, added to these are the trade embargo imposed by the United States
three years ago and the aforementioned armed conAict.
To varying degrees these factors have given rise to reorientations in the
various spheres of economic policy, at times drastic. This has consequently
obliged Nicaragua to rechannel material, human and financial resources
(several of them being increasingly scarce), which combined with other
equally adverse circumstances has had the unwanted consequence of raising
prices and causing a severe disarticulation of the economic system."
(ECLAC, cip.ci!.,p. 1;the complete text is given in Ann. V.l).

153. Despite this situation of economic eniergency and massive defence
mobilization, the effort to use external aid effectively to help the poor and to
protect human rights has been maintained. As to aid. a study commissioned by
1I aid agencies concluded that

"compared with aid to most developing couritries, Western aid to Nicaragua
since the revolution fias beeri well used in meeting development objectives.
(...) ...despite wartime conditions. progress has been made inadministering
aid, in planning its allocation in accordance with national priorities, and in
overseeing its disbursement and use". (Transnational Institute, Aid thut
Counfs:the WesierriConiribiitionro Develqment undSurvivalin Nicorriguu,
Amsterdam, 1987,p. 11 .)

154. Finally, a study commissii~nedby the Swedish International Development
Authority concluded that a kep threat to human rights in Nicaragua is in fact
the undermining of the economy and destruction of social infrastructure in the
"low intensity war" itself:

"International attention has focused on the atrocities committed by the
contrus. Supporters of the Sandinistas can point out that insurgents who commit such atrocities - and the contms have been behaving in this way
for over five years - are improbable standard-bearers of a new age of
tolerance, democracy and pluralisrn. The most important effect of the conlra
war on the nation as a whole, however, is the direct economic damage
caused by the contrasand the indirect erects on the economy. This touches
al1Nicaraguans and al1regions of the country and its effects will continue

to be felt for many years after the fighting has come to an end." (Catholic
lnstitute for International Relations. Righi 10 Survive: Hulnun Rights in
Nicaragua, London, 1987,p. 47.)
155. In conclusion, the Nicaraguan economy since 1979in general, and in the
period of the trade embargo in particular, was extremely vulnerable to economic
sanctions thüt affected its foreign trade or finance, and rfortiori to military or
püramilitary attacks on production capacity. It was made progressively more
vulnerable from 1982 onwards as the scale of canlra attacks was stepped up;

until after 1984only a "survival economy" could be maintained.

Section B. UnitedStates EconomicAggressions

156. The vulnerability of the Nicaraguan economy to exogenous fluctuations
on world markets, due to its extreme reliance on primary product exports and
industrial irnports; and on United States markets in particular, are matters of
public record, as is clear from the sources cited above. This must be well known
to the United States Government; and since 1981 the United States has taken
advantage of this vulnerability to exert a wide array of economic weapons in
order to achieve its objectiveof illicit intervention in Nicaraguan domestic affairs
by economic destabilization. The National Security Coiincil (seepara. 158, below)
refers explicitly to "our overall goal of applying stringent economic pressure".
157. The United States has traditionally employed economic weapons in
order to further its economic policy goals. A detailed study by the Institute
of International Economics (see G. C. Hufbauer and J. J. Schott, Economic
Sa/zcliorrsRt.consiclt.rrd:Hisfory and C~rrrenlPolicy, lnstitute of International
Economics, Washington. DC) reveals 59 cases of application of econornic

sanctions to other countries by the United States since 1940(op. cit., pp. xiii-xvi)
as a foreign policy instrument. In the case of econornic sanctions applied to
Nicaragua, the goal is stated to be to "destabilize the Sandinista governrnent"
(op. rii., Table Il, "Chronological Summary of Economic Sanctions for Foreign
Policy Goals: 1914-1984", p. 19).
158. The explicit intent to destabilize the Nicaraguan economy is clear in the
illegal mining of Nicaraguan harbours (Dispositif, subpara. 6). The National
Security Council memorandum that describes the action (see Ann. X, Attach-
ment C-1) reveals both the objective and perception of trade vulnerability:

"Our intention is to severely disrupt the flow of shipping essential to
Nicaraguan trade during the peak export period. (. ..)In this case, our
objective is to further impair the already critical fuel capacity in Nicaragua."
The crucial argument (loc. cii.) in j~istifyingthe mining is made clear, wherean
attack on a specific tanker is clearly refated to a wider goal evidently already
established: ". .. it isour judgment that destroying the vesse1and its cargo wiil
be far more effective in accomplishing our overall goal of applying stringent

economic pressure".
159. The military and paramilitary activities themselves have been clearty
intended to destroy economic targets, even more than military ones. The282 MlLlTAKYAND PARAMILITARY ACTIVITIES

consequences in terms of export crops, food production, social infrastructure
and energy supplies destroyed, are detailed in Chapter 6 below; and have been
corroborated by the ECLAC (see Ann. V). In the light of this it is difficult to
see how sustained destruction valued at averaging over US$31.2 million a year
between 1983and 1987 (ECLAC ref.) could be the result of uncontrolled contra
activities and not the result of a strategy concerted with the United States.
Nicaragua has given evidence to the Court (see the Memorial of the merits phase!
IV, pp. 32-33; and affidavit by Vice Minister Luis Carriiin, Ann. A, Exhibit A)
to the effect that the United States had given instructions to tconfrus to attack
economic objectives.
160. The Nicaraguan economy has in fact been the specific target of most of

the actions judged illegai by the Court such as the mining of the harbours,
attacks on ports, the "psychological manual" and the trade embargo itself. It
has also been the target of other measures such as pressure on international
credit institutions, the suspension of the sugar quota in 1983,which was found
by the Court to lie outside the terms of the Nicaraguan application, are clearly
related actions and necessary for judging the overall activities.
161. The military and paramilitary attacks on the Nicaraguan economy were
complemented by United States pressure on international financial institutions
in order to deny Nicaragua normal access to concessionary loans. A listing of
the credits vetoed by the United States in theorld Bank and the Inter-American
Development Bank is given in Annex TV.2,Table 7, page 20. The intention of
the United Statesadministration to strangle the Nicaraguan economy by applying
blanket political pressure on independent international financial institutions is
clearly indicated in the letter of Secretary of State George P. Shultz to the
Honorable Antonio Ortiz Mena, President, IADB (Ann. C, Ann. 11-10to the
Nicaraguan Memorial of30 April 1985). Incidentally, the main beneficiaries of
the loan in question would have been Nicaraguan private seçtor farmers. The
letter State:

"Weare also concerned ribout the possible misuse by Nicaragua of the
proceeds from such a loan. As you are aware, rnoney is fungible: monies
received from the Bank would relieve financial pressures on the GON (ed.:
Government of Nicaragua) and free up other monies that could be used to
help consolidate the Marxist régimeand finance Nicaragua's aggression
against its neighbors, who are members in good standing of the Bank.

1believe that we must also consider carefully the reaction of the United
States Congress and the Arnerican public should this proposed loan to
Nicaragua be approved. Weare al1too wellaware of the increasing difficulties
involved in gaining Congressional appropriations for the international
financial institutions,uch as the Inter-American Development Bank. There
is little doubt thüt Executive Board approval of the proposed agricultural
credit loan for Nicaragua would make our efforts even more difficult. In a
broder sense, our joint long-term goal of strengthening the Inter-American
Development Bank and expanding its resource base would be undercut by
Board approval of this proposed loan."

162. An independent scholar, Professor Conroy of the University of Texas,
Austin, mentions other hostile economic measures such as:

". ..successful attempts by the Reagan administration to block short-term
credits from United States banks for the financing of harvests and shipping
of Nicaraguan exports. (...) There were direct attempts by the Reagan
administration and by political groups in the United States that supported its position, to deter consumers from purchasing Nicaraguan products (...)
There were extensivecampaigns by the United States Department of State
to discourage other nations from providing trüde credits for Nicaraguan
purchasesand short-term finaricingfor assistingwith harves~ingand shipping
of Nicaraguan exports." (See M. E. Conroy, "Patterns of Changing External
Trade in Revolutionary Nicarlzgua :Voluntary and Involuntary Trade Diver-
sification", inJ. Spalding, ed., The Politiral Economy of Ret'riiiitionarNicu-
mglin, 1987, pp. 175-176.)

163. The çombination of those economic sanctions undoubtedly forms a
concerted policy of destabilization exercised by the United States Government
on the small, poor and highly vulnerable Nicaniguan economy. It iswithin this
same context that both the military and pararnilitary activities and the 1985
trade embargo mus1be seen ; the objectiveof both has clearly been to undermine
the Nicaraguan econorny as part of an effort to overthrow the government.
Refore the GATT hearings on the embargo, the United States of America made
its intentions ciear:

"The Panel noted that the United States had declared from the outset
that it would not remove the embargo without a solution to the under-
lying political problern." (General Agreement on Tariffs and Trade, Uniicid
States - Truck.Mru.siirc.sAfccting Nirwruguci,L/6053, 13October 1986 -
Ann. 1X.9.)

SectionC. The General Trade Embargo - the Legal Considerations

164. By an Executiveorder of 1May 1985,the President of the United States
imposed a general embargo on the United States trade relations with Nicaragua.

165. Under this instrument. the President of the United States declares:
"1, Ronald Reagan, President of the United States of Americii, find that
the policies and actions of the Government of Nicaragua çonstitute an
unusilal and extraordinary threat to the national security and foreign policy
of the United States and hereby declare a national emergencyto deal with
that threat.
I hereby prohibit al1imports into the United States of goods and services
of Nicaraguan origin; al1 exports from the United States of goods to or
destined for Nicaragua. except those destined for the organized democratic
resistance, and transactions relating thereto.

I hereby prohibit Nicaraguan air carriers from engaging in air transpor-
tation to or from points in the United States and transactions relating
thereto.
In addition. 1hereby prohibit vesselsof Nicaraguan registry from entering
into United States ports, and transactions relating thereto . ..
The prohibitions set forth in this Order shall be effectiveas of 12.01a.m.,
Eastern Daylight Time, May 7, 1985, and shall be transrnitted to the
Congress and published in the fidcrul Register." (Ann. IX.I .)
166. The Olficeof Foreign Assets Control of the Department of the Treasury
issuedthe Nicaragulin TradeControl Regulations implementingthe prohibitions
in Executive Order No. 12513on 8 May 1985(Ann. IX.3). On 31 October 1985,

the President of the United States confirmed its decision (Ann. IX.2).
167. In its Judgment of 27 June 1986,the Court found that this embargo had
in two respects breached the Treaty of Friendship, Commerce and Navigation284 MILITARYAND PARAhlILlTARY ACTIVlTIES

(hereafter referred to as FCN) that had been concluded between Nicaragua and
the United States on 21 January 1956.
168. First, the Court considered that:

"[Sluch an abrupt act of termination of commercial intercourse as the
general trade embargo will normally constitute a violation of the obligation
not to defeat the object and purpose of the treaty." (Case concerning
Militory und Parumilitary Activities in and againsi Nicaragua (Merits),
I.C.J. Reports 1986, p. 138,S. 176.)

169. Secondly, it found "[Tlhat the embargo constituted a measure in
contradiction with Article XIX of the 1956FCN Treaty." (Ihid.. p. 140, S.279.)
Paragraph 3 of the said Article provides as follows:
"3. Vesselsof either Party shalI have liberty, on equal terms with vessels
of other countries, to come with their cargoes to al1ports, places and waters

of such other Party open to foreign commerce and navigation ..."
170. As a result, the Court decided by twelve votes to three

"[Tlhat the United States of America (...)by declaring a general embargo
on trade with Nicaragua on 1May 1985,has committed [an act] calculated
to deprive of its object and purpose the Treaty of Friendship, Commerce
and Navigation between the Parties signedat Managua on 21 January 1956"
(subpara. 10 of the Dispositif of the Judgment, ihid., p. 148);

and
[Tlhat the United States of America (...)by declaring a general embargo
on trade with Nicaragua on 1 May 1985,has acted in breach of its obliga-
tions under Article XIX of the Treaty of Friendship, Commerce and Navi-
gation between the Parties signed at Managua on 21 January 1956."
(Para. Il, ibid.)

171. Consequently, "the United States of America is under a duty to cease
and refrain from al1such acts" (para. 12, ihid., p. 149), and, by fourteen votes
to one, the Court decided

"[Tlhat the United States of America is under an obligation to make
reparation to the Repbulic of Nicaragua for al1injury caused to Nicaragua
by the breaches of the Treaty of Friendship, Commerce and Navigation
signed at Managua on 21 Jariuary 1956." (Para. 14,ibirl.)

172. The present and the following sections examine the loss caused to
Nicaragua by the unlawfiil embargo iinposed by the United States as of 1 May
1985(witli effect as of 7 May) 'and evaluates the reparation due to it.
173. The general principlesconcerning reparation, as set out by the Nicaraguan
Government in Chapter 1 of the present Mernorial, are fully applicable to the
loss caused by the trade embargo imposed by the United States on 1 May 1985
and found by the Court to be contrary to the FCN Treaty.
174. The fact that the breach is of conventional origin has no effect on the
State's international responsibility. In his fifth report as Rapporteur to the
International Law Commission on Responsibility of States (para. 28, notes (45)

'The statisticspresentedhereinafter relateto the periodbeginn1nMay 1985 because
they havebeencompiled on a rnonthlybasis;and in anycase,sincenotice oftheembargo
wNicaragua,eventhoughtheembargorneowasanot formallyinforceuntil7 May.tof view ofand (46), Ytiurhookof the InternationalLaw Commission,1976, II (Part One),
pp. 11 -12), Judge Ago expressed the matter as follows :

"[Tlhere would seem to be no justification for making breaches of
obligations arising from conventions subject to a differentkind of responsi-
bility from that entailed in breaches of obligations arising from custom."
(lbid p.ra. 30, p. 13.)
175. An international obligation is breached, and responsibility incurred,
only for as long as the obligation is in force, The rule is found in Article 18,
paragraph 1,of the draft articles of the International Law Commission on Strite
responsibilit:

"1. An act of the State which is not in conformity with what is required
of it by an international obligation constitutes a breach of that obligation
only if the act was performed rit the time when the obligation was in force
for that State."
As was shown by the special rapporteur of the International Law Commission,
the principle merely reflects the jurisprudence of international tribunals (Ago,

5th Report, quoted above, paras. 43 et seq.)
176. On the other hand, it is not important that the obligation infringed may
have ceased to exist once the dispute is settled. Thus in the case concerning the
Norihern Cameroo~zst,he Court said :
"[l]t may be contended that if during the life of the Trusteeship the
Trustee was responsible for some act in violation of the terms of the
Trusteeship agreement which resulted in damage to another Member of the
United Nations or to one of its nationals, a claim for reparation would not
be liquidated by the termination of the Trust." (Judgment of 2 December
1963. 1.C.J.Reports IY63, p. 35,)

177. On the basis of this Judgment and several arbitral awards, Judge Ago
has expressed the view that :
"Al1the decisions analysed therefore confirm the validity of the principle
that a State shall be held to have incurred international responsibility if it
has adopted conduct different from that required by an international
obligation incumbent on it at the time such conduct took place." (Ago, 5th

Report, prec., para. 48, p. 17.)
178. This viewis in conformity with the spirit of the provisions of Article 70,
paragraph 1.h, of the Vienna Convention on the Law of Treaties under which
the extinction ofa treaty "does not affectany right, obligation or legal situation
of the parties created through the executionof the treaty prior to its termination".
179. Thus in the present case the United Statesis required to make reparation
for the damage sufrered by Nicaragua as a result of the embargo, even though
on the day on which the embargo was decided, it gave notice of its intention to
Jenounce the FCN Treaty. Indeed, under Article XXV, paragraph 3, the Treaty
could be abrogated only on one year'snotice. Thus the obligations of the United
States under the Treaty ended on 1 May 1986.It was in force both on the date
when the embargo was first imposed and when it was confirmedon 31 October
1985(Ann. IX.2).

180. The question of the date until which compensation is due to Nicaragua
as a result of the embargo calls for separate consideration:
"The breach of an international obligation by an act of the State having
a continuing character occurs at the moment when that act begins.286 MILITARY AND PARAMILITARY ACTIVITIES

Nevertheless. the time of commission of the breach extends over the entire
period during which the act continues and remains not in conformity with
the international obligation." (ILC draft articles on State Responsibility,
Art. 25, para. .)

181. The embargo, which was confirmed on 31 October 1985,continues to be
detrimental to Nicaragua. It may ihus be regiirded as an "act of the State having
a continuing character". Judge Ago has expressly cited the "maintenance of
provisions in force incompatible with the provisions of a treaty" among the
examples he has given to illustrate the concept of "continuing wrongful acts"
(7th Report, Yeurboo ciftlie I~~ft~rrratiolalwCon~missiur i978,II (Part One),
s.28, p.42. see also: 5th Report, quoted above, S.62, p. 22).
182. The very nature of the breach of international Iaw constituted by the
embargo would seem to justify the conclusion that the United States should be
required to make reparation for as long as the embargo is in force. Nevertheless!

since the Court has taken the view that the embargo was a violation of the FCN
Treaty, but not of international customary law (Judgment of 27 June 1986,
L C.J. Repcirfs1986, S.245,p. 1263,and since the treaty ceased to be in effect on
1 May 1986, the obligations of the United States under the Treaty may be con-
sidered to have terrninated on that date.
183. As indicated in Article 18, paragraph 3, of the International Law
Commission draft articles,
"3. If an act of the State which is not in conformity with what is required

of it by an international obligation has a continuing charaçter, there is a
breach of that obligation only in respect of the periodduring which the act
continues while the obligation is in force for that State."
184. Although the Panel of the GATT constituted to examine the embargo
and its effects has ruled that under the General Agreement benefits accruing to
Nicaragua have been nullified and impaired by the embargo (Ann. IX.6, p. 14),
and although the Court has referred neither in the reasoning nor in subpara-

graphs 11and 14of the Dispositif of the Judgment of 27 June 1986to any time-
limit upon the United States breach of its i~iternational obligations or its
obligation to make reparation, the Government of Nicaragua presents hereafter
an assessment of the damages it has suffered only for the period when the FCN
Treaty rernained in force. As to the embargo, the relevant period thus runs from
1 May 1985to 30 April 1986.
185. In any event there is strong evidence that the first year of the me~isure's
application has had lasting effects (see infrup,ara. 224); and particularly in the
subsequent year due to the effect upon the agriciiltural production cycle.
186. Liability is therefore entailed for all economic loss resulting from the
embargo during the period 1May 1985to 30April 1986,as wellasfor subsequent
economic losses, that is, hürm that, though occurring after 30 April 1986, was
the result of the first year of the eitibargo.

Section D, ReparationDue triNicaragua

187. As established in Chapter I above, the cardinal principle applicable to
reparation isthat it must, as far as possible,itesate the prejudicial consequences

of the wrongful act.
188, The only appropriate reparation for damages suffered as a result of the
embargo would, inthe view of the Nicaraguan Government, be the payment of
an amount equivalent to the loss sustained. Any other form of reparation would be unsuitable in the present case. No satisfaction could compensate for the
material damage caused by tlie embargo to Nicaragua's economy. R~stitulio in
integrilmwould seem to be totally impracticable.
189. The Government of Nicaragua will establish hereafter the extent of the
damges it has sustained as a result of the unlawful embargo both upon its
exports (subsec. jb), infra) and its imports (subsec. (c) , infra) as well as the
losses of production (subsec. (d), infra). A few general introductory comments
need to be made first about the existence and magnitude of the loss, and the
method used to evaluate it.

(a) Generul Principles Applicable lo the Eva/uutiun ofDamagm Cuusedby rhe
Embargo on Nicaraguta

(i) Genernlcnnsicierafionson the exlent of the dumage

190. On several occasions, the General Assembly of the United Nations has
condemned the trade embargo imposed by the United States (cf, A/RES/40/188
of 17 December 1985; A/RES/41/164 of 5 December 1986 and A/RES/42/176
of Il December 1987) and denounced "the negative efects" of the embargo on
Nicaragua's economic and social development. Even if no account is taken of
the medium- and long-term consequences beyond April 1986of the embargo for
the Nicaraguan economy - which will be examined in Chapter 6, these "negative
effects" are of extrerne importance in spite of the fact that the actions taken by
the Nicaraguan Government had some effect in limiting their impact.
191. As explained in Section A, parligraphs 140-155, supra, Nicaragua's
economy is extremely dependent upon and strongly dominated by foreign trade.
Indeed, as economists and lawyers have repeatedly stated:

"La situation du boycott risque d'êtred'autant plus incommode quand la
part de son commerce extérieurest plus considérable,qu'ilest plus dépendant
économiquement des autres pays en produits de première nécessitéou en
matières premièresindispensables" '.(Lucchini, "Le boycottage", in SFDI,
colloque d'Orléans, Aspecis du droit internuticinaléconomique,1972, p. 94 ;
see also Laferrière, "Le boycott et le droit 'international"', RCDJP, 1910,
p. 312; Leben, "Les contre-mesures intérétatiqueset les réactionsà I'illicité
dans la sociétéinternationale", AFBI, 1982,p. 72).

192. This is why, in reiterating the condemnation in paragraph 7 (iii) of the
Ministerial Declaration of GATT of 29November 1982and UNCTAD resolution
152(VI) of 2 July 1983,the General Assembly drew attention to the particular
vulnerability of developing countries to "economic measures as a means of
political and economic coercion" by developed çountries and, in particular, their
vulnerability to embargoes (A/RES/38/197, 20 December 1983; A/RES/39/210,
18 December 1984 ; A/RES/40/185, 17 December 1985 : A/RES/41/165 of
5 December 1986; A/RES/42/173 of Il December 1987).
193. In the case of Nicaragua, such dependence and vulnerability are parti-
çularly marked with regard to the United States which was its main trading part-

lier up to 1985(as to exports, see infra, para. 208, and as to imports, see infru,
para. 225).
194. The 1987ECLAC report on Nicaragua States:

'A countrywill bemore particularlyinconvenienceby a boycottwhenits foreigntrade
plays an important role and whenit iseconomicallydependent on other countriesfor
indispensablegoods or rawmaterials.288 MILITARY AND PARAM~LITARY ACTIVITIES

"The relatively highimportance ofthe trade that Nicaragua has historically
maintained with the United States sufficesto explain the impact of such a
measure." (ECLAC, IC/MEX/lO2, 16February 1988,Ann. V.l, p. 8.)

195. Immediatelyafter the failof the Somoza dictatorship, the newgovernment
attempted to diversify Nicaragua's trade relations, not out of hostility towards
the United States, but because it regarded this situation of extreme dependence
to be an unreliable basis of long-îerm independent eco~ioniicdevelopment. The
1980 Economic Programme ("Programme of Economic Reactivation to the
Benefit of the People") setout market diversification as a key strategic goal :
"This programme initiates the utilization ofthe major institutional changes
in the external sector,...the diversification of trade relations towards new

markets . .the planning of imports ... and the renegotiation of external
debt, putting them at the service of the satisfaction of the needs of the
majority, at the same time as the transition to the NewEconomy isinitiated."
(Ministerio de Planification, Plan de Reactivacion Econornica en Beneficio
del Purhlo, Managua, 1980.)
196. As demonstrated by Professor Michael E. Conroy, despite the difficulties
of this policy, it had begun to bear fruit at the time when the embargo was
imposed (M. E. Conroy, "Patterns of Changing External Trade in Revolution-
ary Nicaragua : Voluntary and Tnvoluntary Trade Diversification" in Rose

J. Spalding, ed., The Political Economyof Nicar[igua, 1987, pp. 169-194;see, in
particular, pp. 180-183). If no such efforts hacl been made to diversify, the
damage caused by the embargo to the Nicaraguan economy would have been
even more serious.
197. In accordance with the principle whereby the extent of the harm deter-
mines the amount of the compensation, the Court will probably consider that
the compensation due to Nicaragua is solely measured by the loss actually
incurred. To the extent that Nicaraguan authorities have managed to find new
outlets or new suppliers, the sums thus earned will be deducted from the
compensation due. Becauseof this, also, the United Statesescapesfurther liability
due to Nicaragua's trade diversification efforts'.
198. It should also be borne in mind that the extreme suddenness of the
measure taken by the United States rendered the reconversion efforts of the
Nicaraguan authorities even more difficult.
199.As has been explained :

"Most Third World nations produce and export relativelyundifferentiated
unprocessed or semi-processed raw materials for which it takes great time
and effort to develop market contracts and market penetration. In the event
of a decision to use political criteria to deny a nation access to markets,
it is relatively simple for importing nations to find alternative sources.
Cornpetitive pressures reducethe ability of the exporting nation to find
alternative markets, especiallyin the case of perishable products. And brief
delays or simple disruptions in the marketing of critical exports can have
immediaîe and dramatic iitipacts upon the standard of living of srnaIl ,pen
economies that cling tenuously to export-led growth that swingswidelywith
variations inannual export earnings." (M. E. Conroy, op. cit., p. 172.)

200. Similarly, as regards imports, the close ties built up over the years with

'The Governmentof Nicaraguarespectfullysuggeststhat this elementbe taken into
considerationwhen assessingmoraldamagesrequestedby Nicaragua. MEMORIAL(COMPENSATION) 289

United States suppliers makes rapid re-adjustment extremely difficult,particularly
for the purchase of spareparts for old equipment. The embargo order was issued
on 1 May 1985,and became effective sixdays later. Obviously, Nicaragua could
not find alternative solutions, new trading partners and other markets in such a
short time. By imposing a period of one year's notice prior to any termination,
Article XXV, paragraph 3, of the FCN Treaty was precisely intended to avoid
placing Nicaragua in such a situation. If it had been able to benefit from this
one-year period, it would have been in a much better position to neutratize the
effects of the embargo, but, without it, Nicaragua had to meet the consequences

"head on".

(ii) Generalruhsfor the evaluationof rhedamugesustainedby Nicaragua

201. Given the extreme diversity of methods applied by international tribunals
to rtssessthe damages sustained by States as a result of internationally unlawful
acts, authors generally admit that

"International law provides no precise methods of measurement for the
award of pecuniary damages (...)[Tl he general rule is to restore the injured
thing to integrityagain or to offer an equivalent therefor; but the problems
which arise in this effort may be as numerous as the cases themselves". (Cl.
Eagleton, The Respoiîsibility of Srutes in International Law, 1928, p. 191 ;
see also M. M. Whiteman, Damages in Internutional Law,Vol. II, 1937,
pp. 1548-1549,or 1. Brownlie, System of the Law of Nations - Stat~ Res-
ponsibility, Part1, 1983,p. 227.)

202. This conclusion is particularly relevant when the damage, as in the
present case, is complex and caused by the convergence of high miscellaneous
elements. As explained by Professor Charles Rousseau,
"IIest rare que le montant du dommage puisse êtredéterminé avecune
exactitude absolue, notamment dans le cas de dommage causé à un ensemble

complexe (recofte, troupeau) dont les élémentsne sont pas connus avec
précision. L'évaluation np eeut êtrequ'approximative" '.(Droit international
public, Vol.V. Les rapports conflictuels,1983, p.234.)
203. Nevertheless, as established in Chapter 1, the dificulty of determining
damage can never provide grounds for rejecting an international claim:

"[III n'est pas permis au juge de débouter le défendeuren alléguantdes
difficultésdans l'évaluation du fondement de la demande. Ce faisant, il
commettrait un dénide justice" *. (G. Salvioli, "La responsabilitédes Etats
et la fixation des dommages et intérêtspar les tribunaux internationaux",
Recueildes cours, 1929, Vol.28, p.275.)

204. Thus, as indicated in Chapter 1of this Mernorial, even in the absence of
precise rules about the method of evaluating damage, judges and the parties may
and should rely on general principles for guidance, and, in particular, on the
idea that "[Rleparation rnust, as far as possible, wipe out al1the consequences

Itisrarethat theamountofdamagemaybedeterminedabsolutelyexactfy,particularly
in the casof damagecaused toa complexunit(harvest, herd) the variousparts of which
have notbeenidentifiedwith any certainty.Evaluationrnayonly be approximate.
'A judge isnot allowedto dismissa claimbecauseof allegeddifticultyinevaluating the
basisof that claim.In so doing.he wouldbeperpetratinga denial of justice.790 MILITARYANI) PARAMILITARY ACTIVIT~ES

of the illegal act" (Factnr uyChorzciw,1928, P.C:.LJ., SericsA, No. 17, p. 47 -
see supra, Chap. 1).
205. Nicaragua has assessed the loss çaused to it by the unlawful embargo

decreed by the United States on the basis of those general guidelines. In
particular,
- the only loss considered is dsmage, the existence and magnitude of which
can be proven - and which has been caused, without any doubt, by the
embargo itself;

- the extent and cause of the loss having been established, it has not been
necessary, forthe purposes ofthis assessment, to have recourse to calculations
of probability;
- lastly, Nicaragua has confined itself to the lossesit sustained as a consequence
of the first year of the embargo, that is, the period from 1 May 1985 to
30 April 1986.

206. The method used to make the relevant calculation is explained in detail
fOr each category of IOSSin Annex IILZ. The calculations are summarized
in subsectionsihjii (paras. 212-724), jc)ii (paras. 231-236) and (cl) (paras. 237-
242), infra.
207. The total amount includes only damage that can be calculated precisely.
Except in certain cases (for example, bananas), it does not include provision of
the frequently high expenditure involved in organizing fact-finding and negotia-
ting missions for the purpose of finding new markets, both for exports and
imports, as well as founding and consolidating commercial offices and firms in
Canada, Argentina, Spain, the Federal Republic of Germany, Belgium and
Mexico. New markets were found for meat (Canada), sugar (Sri Lanka, Pakistan,
the Federal Republic of Germany, the Netherlands and the USSR), molasses
(Netherlands), bananas (Belgium) and marine products (Canada). Moreover,

the calculations have been made product by product to the greatest extent
possible in order to provide the Court withprecise data, and therefore cover the
five main export products and 23 categories of highly significant imports
individually. The calculations for the other export and import products have
been done in aggregate. The social repercussions have not, however, been
quantified, and in particular the negative effectsof the embargo on medical and
health services and on employment. (See Ann. 1V.5,however, for an overview of
long-term developmental consequences in the social sector.)

(b) AdverseConseyuences of the Embargo for Nicuraguu's Elcports

(i) Generalconsidcraticins

208. Although the share of Nicaragua's exports to the United States had
decreased considerably during the 1960sand the 1970s, the proportion was still
36 per cent in 1980and 12.3per cent in 1984 (see ECLAC Report on Nicara-
gus, 1987, Table 11, p. 49). This reduction was partly due to the Nicaraguan
Government's moves to diversify foreign trade in an orderly fashion (see supra,
para. 195) and, administrative and customs harassrnent by the United States
Government after 198 1.
209. Moreover, for certain types of produce, the United States was the only
outlet, or at least a predominant one. In 1984,the United States absorbed 100
per cent of Nicaraguan exports cifbananas and molasses, 85 per cent of murine
products, 76 per cent of tobacco and cigar exports, and 47 per cent of meat
exported (see Ann. 111.2.Table No. 2, p. 3); see also General Agreement of Tariffs and Trade, United State.~ - Trurfe Measirrrs Af~cting Nimragriu,
Annex IX.6, Table 3. page 6.
209 [bis]. In these conditions, the losses sustained by a small country which
was extremely vulnerable to pressure from outside were necessarily high, inde-
pendently of the measures taken by the United States authorities before their
embargo, and which had adverse efects on that country's trade, such as the 90
per cent reduction of the sugar quota from 58,600 short tons to 6,000 short tons
per annum in breach of the commitments entered into by the United States. As
;i rrsult of the latter decision, which came into force on I October 1983 (see
Ann. TX.4) and which was condemned by a panel of GATT set up under
Article XXIII, paragraph 2, oftheGeneral Agreement (seeAnn. IX.5), Nicaragua

suffered losses equivalent to US$33 million.
210. The Government of Nicaragua wishes to point out once more that such
fosses,although iinquestionably caused by the wrongful acts of the United States
are not included in the calculation of lossescaused to Nicaragua by the embargo.
211. For this purpose, the following elements have been taken into con-
sideration :
- the loss of cargo already loaded, prevented from reaching the United States
before 7 May 1985,or goods ready to be exported and which could not be
-
preserved ;
- the difference between prices obtained from the new purchasers - which had
been the object of a costly search -and those agreed with the original North
American purchasers (the reference used is 1984prices);
- when possible, additional costs involved in diversifying the exports to more
distant markets incfuding: costs of transport. forrning new firms, trading
offices.communications,market research, relocation of exports and personnel,
and the training of labour to extract, manufacture and label goods to new
specifications since the goods coming under the embargo were extracted,
processed and packaged taking iritconsideration the proximity ofthe United
States market and consumer dernand in that country. Bananas. for instance,
were cut at a specific level of the bunch to ensure their ripening during the
short journey frorn the Nicaragiian ports to the West Coast of the United
States. In the case of seafood, only the lobster tail was sold; tobacco and
cigars were of a specific quality intended for the North American market.
etc. In several cases, however, there has not been sufficient data to take
account of these elements.

212. On the basis of the previous data. Annex 111.2explains the methodo-
Iogy that has been followed in order to calculate harm to Nicaragila's main
exports. A brief summary of the main conclusions to be drawn from these studies
follows :
213. Sugur: Average annual production is estimated ai sorne 50,000to 60,000
short tons. representing in 1980about 4.4 per cent of the total value of Nica-
ragua's exports. The United States, following the 90 per cent reduction in the
quota (see supru. para. 209), was buying only 6,000 tons, at a fixed price of
US320.31 per hundredweight (cwt). Thus during the one-year period which

elapsed between 1 May 1985and 30April 1986the value of sugar exports to the
United States should have totalled US$2.437 million (based on firm cornrnitments
tci purchase at a fixed price). Nicaragua was compelled to sel1the extra 6,000
tons on European markets at an average price of US$5.69 per hundredweight.292 ~IILITARYANI) PARAMILITARYACTIVITIES

Currency payments thus totalled IJS$683.000amounting to a shortfall- directly

due to the embargo itsel- of US$1.754million (see Ann. 111.2,pp. 4-5).
214. Banonas:This product accountedfor about 3 percent of the total exports
of Nicaragua in 1984.Due to the embargo, Nicaragua was forced to conduct a
search for new markets, once again, mainly in Western Europe. A permanent
officewas setup inBelgiumat great expense.
215. The damages sustained may be classifiedin two cütegories. First, there is
the price differentialthat is due niainly to transport costs. Secondly, there is the
very high cost of the investment necessary to penetrate these new markets.
Because of this, the negütive efects of the embargo were particularly marked
during its first yearduring which reparation is unquestionably dueto Nicaragua.

For this year alone the loss amounts to US$14.1million (see Ann. 111.2,pp. 5-6
and Table No. 4, on p. 7).
216. Scafood: The United States represented 85 per cent of the total market
prior to the embargo. Losses totalled US$320,000because of spoiled goods and
"reconversionf' and storage costs, and USS3.15 million owing to the price
differential. The totalomes to US$3.48mitlion (seeAnn. TIr.2,p. 10,and Tables
Nos. 6-A and 6-B).
217. Meal: Sales on the American market arriounted, in 1984,to 34 per cent
of Nicaragua's totalmeat exports in 1984.Although it has been less difficultto
find new markets for meat than for bananas or sugar, there was a specificloss
of US$270,000,on account of meat that was ready to be exported in May 1985

but could not be sold. To this sum should he added some US$24,000 for
containers ready to be shipped at Puerto Cortes (Honduras) and returned to
Nicaragua paying dead freight.
218. Moreover, because of tlie price diferential between salesat the normal
level in the United States and açtual sales, Nicaragua incurred a loss of
US$399,540 for the period 1 May 1985to 30 April 1986.Total damages thus
sustained therefore amount to US$690,000(seeAnn. 111.2,p. 8and Table No. 5).
219. Tobaccoand cigurs: The United States was almost the sole market prior
to the embargo. The search for new customers was a particularly long and
difficult one, with the result that Nicaragua was virtually unable to export

these products during the first year of the embargo. Even if the storage costs
and production losses are excluded, the loss amounted to US$620,000 (see
Ann. 111.2,p. 12).
220. With regard to other products formerly exported to the United States, in
particular, molasses, sesame,coffee,etc., it is difficultto calculate these precisely
for lack of complete data, but the Nicaraguan Governrnent estimates them at
US$2.2 million (see Ann. I11.2>Table 14, p. 27). The basis Forthis figure is the
average rate of loss sustained in the export of the six products and serviceslisted
above, Le., 52 per cent applied to the total value of exports to the United States
in 1984for other products and services.
221. The total of the figures for export lossesthus amounts to:

- bananas = 14,212,000
- seafood = 3,470,000
- sugar = 1,754,000
- meat = 690,000
- robacco and cigars = 617,000

- air traffic = 6,000,000
- financial costs = 404,300
222. The embargo also seriously aEected the üctivities of Aeronica, the
Nicaraguan air Company.Travel to the United States represented 45 per cent of MEMORIAI, (COMPENSATION) 293

its total net incomein 1984. Losses incurred as a result of the suppression of air
traffic (passengers and goods) between 1 May 1985and 30 April 1986 totalled
US$6 million (see Ann. 111.2,p. 22).
223. The embargo also led to greater financial costs for Nicaragua in con-
nection with its exports. On average ten extra days were required for the receipt
of export payments. At an average interest rate of 8 per cent per annum (the
average LIBOR for 1985-1986, see Ann. VI.2), the consequent loss totals
US404.3 thousand (see Ann. 111.2,p. 25 and Table No. 13, p. 33).
224. The highly signifiant qualitative aspects of the loss incurred due to the
export embargo have not been considered either. In many cases, it has not been
possible to reckon the cost of missions, communicationsi etc., necessary to
penetrate new markets. These were particularly high during the year which

followed the announcement of the embargo. Nor have values been estimated for
the loss of decades of favourable business, knowledge and experience with the
North American market. In Chapter 8 of this Memorial Nicaragua requests the
assessment of pecuniary satisfaction for moral damages, among other causes,
for the violation of the FCN Treaty. These considerations are pertinent to the
assessment of those Iosses.

(c) The Harmjul Fflectsof the Embargo on Nicurugua'sImporrs

(i) Generul consideraiions

225. The share of United States products in Nicaragua's imports is even
greater than in the case of exports. From 28.8 per cent in 1977,it Fe11slightly to
27.5 per cent in 1980and then to 19 per cent in 1982and 15.1 per cent in 1984
(see ECLAC Report on Nicaragua, 1987, Table Il, p.49) as a result of
Nicaragua's policy of diversifying its trade relations after 1979 (see supra,
paras. 195-196) (seeM. E. Conroy, op. cit.. pp. 179-183).
226. Here again, however, the gross statistics are misleading. Prior to the
embargo, imports from the United States continued to play a decisive role.

"While the overall value of imports from the United States declined!
Nicaragua remained dependent on her Northern neighbor in several strategic
product categories. In 1982the United States supplied 42 per cent of im-
ported chemicals (used largely in agriculture production) and 44 per cent of
imported spare parts. Spare parts were critical in keeping the Nicaraguan
economy running, particularly because much of the country's machinery -
in sugar production, for instance, dated back to the early decades of this
century (...)The Ministry of Industry (for its chemical, instant coffee,cereal,
beer and tanning plants) and the State-owned oil Company both relied on
the United States for 80 per cent of the spare parts needed in their daily
operations." (S. Maxfield and R. Stahler-Sholk, "External constraints" in

Walker, op. cit. p. 248.)
In other words, before the embargo, the whole of Nicaragua's production was
dependent on United States technology and imports, particularly because of the
critical need for spare parts which ofien could not be found elsewhere. Table

No. 8 of Annex 111.2,page 14,specifiesthe structure of imports from the United
States in 1984.
227. This situation of extreme dependence due to historical and geopolitical
factors could not be remedied in the short run. Thus, the prejudicial effects of
the embargo on imports were much greater than on exports. 228. The main categories of damage that can be isolated and assessed pre-
cisely are:

the difference between the prices paid to traditional United States suppliers
and those paid to new importers (when it had been possible to find them);
thisdifference is unavoidable since it is mainly due to geographiçal problems:
when importing goods from overseas the transport is inevitably mucl1more
important than when they corne from the United States; however, the
traditional structure of shipment (important sea traffic between Central
America and the United States, by the "cabotage" system) can no longer be
used by Nicaraguan importers (see Ann.111.2).
the effects of the devaluation of the dollar as compared with the other main
currencies in which substitute irnports hadto be paid;
certain additional financial costs
when possible, efects directly deriving from the embargo: additional pur-
chases made necessary by the impossibility of obtaining certain spare parts.

229. ln addition, the first year of the embargo had many prejudicial affects in
the medium and long term. These will be examined in subsection D (infra.
paras. 237-241).
230. It has not been possible to calculate very precisely the "qualitative"
damages caused by the embargo on imports. These exist nonetheless (see supru,
para. 226).

(ii) Evulurriionof duir~agesto imporls
231. Annex 111.2to the present Memorial describes the methodology that has
been followed to calculate damiiges to Nicaraguan imports and it also applies
that methodology. To avoid a piecernealand repetitive approach. in this Memorial
the following summary of the conclusions of Annex 111.2are not presented

product by product as for exports, but according ta the categories of injury
sustained by Nicaragua.
232. To establish the amount of losses due to the higher cost of goods that
Nicaragua had to import to substitute for those traditionally purchased in the
United States, it has been necessary to identify categories of goods thatcaragua
formerly bought from the United States. Annzx 111.2identifies 23 highly sig-
nificant products on the basis of 1984 imports (see Ann. 111.2,Table No. 9,
p. 16). The pricc differential on these imports has cüused a total loss of
US$51.9 million.
233. These 23 products or categories of products represented, in 1984,about
40 per cent of Nicaraguan total imports from the United States. However, the
dispersion of the remaining products is such that detailed studies cannot be
undertaken. The Nicaraguan Ciovernment estimates that because the remaining
products are of a less crucial nature and more easily obtainable elsewhere. the
respective differentials in purchasiag price. freight, insurance and commercial
costs are of the order of half the average price increase an the 23 identified
products compared to tliese same costs in 1984. It should be emphasized that

these quantitative differentials do not reflect the sigtiifcant qualitydiFerences
in some products to Nicaragua's disadvantage. Therefore, losses due to higher
import prices in new markets for the remaining commodities which would
have been purçhased in the IJnited States are conservatively estimated at
US$]41.5 million.
234. in calculating losses from revaluation in new import markets. it is
sufficient to determine the rate at which import trade from the United Stateshas been diverted to West European markets, and apply for each country the
corresponding re-evaluation coefficient.The total amount cornes to US$10.9 mil-
lion (Ann. 111.2, p. 17and Table No. IO, p. 18).
235. Additional costs of intermediaiion are more difficultto establish precisely,
but there has been an additional loss due to this factor.
236, The sum of lossesincurred by Nicaragua and calculated above thus totals

- Higher import prices = US$193,365,000
- revaluation in new irnport markets = 10,857.000

(d) Lo.~se.sf PrriductMinunclMedium-Term Effeci ofthe Emburgo

237. Obviously, the interruption of trade with the United Stateshad immediate
negative efyects on production. In this respect, the immediate interruption of
iinports has been particularly detrimental during the frst year of the embargo.
Contracts worth US$12.2 million concluded with American suppliers for the
purchase of agricultural produce or equipment (seeds, fertilizers, ranching sup-
plies, spare parts) could not be honoured. Nicüraguan Farrners were unable,
either at that tirne. or, in some cases. ever again to find these indispensable items,
Le., spare parts for equiprnent of United States origin. This had repercussions
on crops and in relation with the agricultural cycle these effects were especially
important in 1986 even if the faIl in production was already significant in 1985
(see Ann. 111.2,pp. 24-25 and Table No. 11, pp. 29-33). The sarne is true of
industrial production, mining and quarrying, fisheries, energy and transport (see
ilpirfp. 21).
238. Indeed. the first yearoftheembargo has had negative efTectsin 1985-1986,
and these eifects have continued. It was in 1986and not in 1985that losses of
crops due to lack of seed supplies or spare parts for the tractors during the

previous year, were most marked. Also, it must be kept in mind that even if the
embargo had been discontinued on 1 May 1986.it would not have been possible
for Nicaragua or Nicaraguan entrepreneurs suddenly to terminate the con-
tracts (imports or exports) that had been reached with new partners on a less
advantageous basis than with traditional United States partners, etc., nor to
automatically renew their old long-term contracts with United States firms that
had been terminated by the embargo. The entrepreneurs had already lost their
representation and distributorship contracts which represented a financial loss
for them in and of itself.
239. In abstract terms, it would perhaps be possible to develop an econometric
mode1 to calculate the medium- and long-term effects of only the first year of
the embargo. But such an enterprise would be extremely difficult and divorced
from reality since, as the embargo remained in force, it is practically impossible
to distinguish thedamage caused by the first year of the embargo from that due
to its subsequent application.ltispossible, however. to calculate theconsequential
cost of the losses due to the embargo on the nation's Gross Domestic Product.
240. ln these conditions the Nicaraguan Government suggests that it would
appear reasonable to calculate the compensation due to it on the basis of the
total production losseswhich occurred during the first two years of the embargo,

that is .rom I May 1985to 30 April 1987,as well as their impact on GDP for
those years, and not to take subsequent losses into account. These losses may be
evaluated precisely according to the method described and applied in Annex 111.2.
Thus calculated, the amount totals US$26,930,000. In Chapter 6 the consequent
decline in the GDP is presented.
241. ln addition. as explained above (paras. 237-238), the qualitative aspects296 MILITARYAND PARAMILITARY ACTIVITlES

of the harm caused by the embargo have not been included. It should be borne
in rnind that farniliarity withsuppliers, access to inventories of spare parts and

consumer goods of North American origin, were essential for an industry and
an agriculture developed on the basis of the technology of that country. The
embargo provoked a major dislocation of the whole economic system of Nica-
ragua, the erects of which have not yet been foreseen in their totality, even
though they have been manifestly present ever since the embargo began. Similarly,
however difficult it may be to ascertain the social cost of the embargo, the latter
undeniably exists.
242. Thus, for exümple, in spite of apparent exceptions in United States
Regulations (see Ann. IX.8, ss. 540.539and 540.540), the health sector has been
especially affected. Many medical supplies could not in fact be purchased; this

was the case, for example, for oral proteins, anaesthetics, coagulating agents,
some antibiotics, etc. In relation to the maintenance of hospital equipment.
Nicaragua was also seriously afféctedsince equipment comes mainly from the
North American market. All this had very negative consequences l'orthe health
of the population (seeAnn. 111.2p,p. 22-23). In the same spirit it rnust be stressed
that the United States Administration harassed humanitarian organizations and
more often than not denied export licences they needed (for an example, see
Ann. IX.7: pp. 2-4) '.

(e) Conclusion

243. The Nicaraguan Government is thus able to assess the losses it has in-
curred as a result of the embargo as foltows:
- US$22,864,000 for losses in çommodity exports.
- US$193,365,000 for losses related to imports.

- US$11,261,000 for losses in currency revaluation and financial inter-
mediation.
- US$26,930,000 for losses in production due to the embargo.
These four categories are surninarized and set out by year of incidence in
Annex 111.2,Table 14,page 27. Their combined total is US$254,420,000.

244. The actualization of these losses to their present value in 1988 (see
Ann. V1.2for methodology) gives a total actualized loss of US$325,400,000.

'The Governmcnt of Nicaragua respcctfully suggest that this clernent be taken into
consideration when assessing the moral damagcs requested by Nicaragua. CHAPTER6

LOSS CAUSED TO DEVELOPMENT POTENTIAL

Introduction

245. In its Judgment of 27 June 1986.the Court decided,by twelvevotes to three

"That the United States of America is under an obligation to make
reparation to the Republic of Nicaragua for al1injzrrycaused to Nicaragua
bythe breaches ofobligations under customary international lawenumerated
above" (Case concerning Militury and Pararnili~uryActirities itand agftinst
Nicuruguu, 1.C. J. Reports 1986, p. 149, Dispositif, subpara. 13 ; italics
added ),
and, by fourteen votes to one

"That the United States of America is under an obligation to make
reparation to the Republic of Nicaragua for all injtrrycaused to Nicaragua
by the breaches of the Treaty of Friendship, Commerce and Navigation
between the Parties signed at Managua on 21 January 1956." (Ibid.,
subpara. 14 ;italics added.)

246. These decisions are in keeping with the Court's jurisprudence according
to which
"Reparation must, as far as possible, wipe out al1the consequences of the
illegalaçt ..." (IY38, P.I.C.J,Case concerning the Factory ut Cl~orib~ for

Indemnity) (Merits), Series A, No. (7, p. 47- see Chap. 1.)
247. Nevertheless, if consideration were given only to the damage described
in the previous chapters, Nicaragua would not receive reparation '7i)ral1in-
jilry" sustained and the reparation would not "wipe orrtal1conseqrrences"of the
"illegal" acts committed by the United States and considered by the Court.
These acts had, in effect,real and extremely adverseconsequences for Nicaragua's
economy and for its economic and social development potential.
248. So far, the Nicaraguan Government has established thüt it has sus-

tüined - and, in several cases. continues to sustain- the following injuries due
to theunlawful acts perpetrrtted by the United States:
- human suffering,
- material destruction of property,
- production losses, and
- loss of export earnings or increased cost of imports. as a consequence of the
trade embargo.

Wherever possible, it has calculated the amount of damage incurred and,
~tccordingly,the compensation due to it on that account. Italso has established
the amount of the additional government spending that has been necessary to
defend thecountry against the United States military and paramilitary activities.
249. The characteristic shared by these categories of damage is that each of
them may be traced baçk to one or more of the United States activities that the
Court has held to be contrary to international law : the mining of the ports has
led to destruction and loss in fishing income; the embargo is responsible for
particular production losses or shorthll in export earnings, etc. But the damages298 MILITARY AND PARAMILITARY ACTIVITIES

sustained by Nicaragua are much greater than this analysts alone would show.
Each particular injury has direct negütive repercussions on other types of activity
and, when taken together, they have a cumulative effect upon Nicaragua's eco-

nomic and social development.
250. The nature of this form of harm may be examined from two different
points of view; and for the sake of clarity, the economic and the social aspects
will be presented one after the other.
251. First, the unlawful acts of the United States have directly led to a
reduction in the Cross Domestic Product (GDP) of Nicaragua, that is to the
sum of the value added by each branch of the economy to the resources at its
disposal. As a conseqiience of the production losses - which are established in
the previous chapters -, the economy has less foreign exchange at its disposal
and the productivity of nearly al1sectors has been affected. This is what may be
called the "GDP loss".
252. Secondly, these unlawful acts by the United States havehad very dramatic
effects on the health-of the population, the education of future generations,

housing, the transport infrastructure, etc. These negative social effects may be
grouped under the general title of "social losses".
253. It has been relatively easy to assess the first of these two categories of
damage (GDP loss); on the other hand, the social losses are more difficult to
calculate precisely, although they unquestionably exist.
254. Before proceeding to describe in detail and, when possible, to make an
assessrnent of harm caused to Nicaragua's economic and social development, it
is necessary toestablish the principle of the obligation to make reparation, which
is incumbent upon the United States.

Section A. The Obligation to Make Reparation

255. In accordance with the general principle of custornary law that has at
present found expression in Article 1of the International Law Commission draft
articles on State Responsibility, "Every international wrongful act of a State
entails the international responsibility of that State". Consequently, any damage
that originates in an ititernation~illywrongful act obliges the States to which that
act may be attributed to make reparation, as expr-csseedin Article 6 of the
second part of the draft articles prepared by Professor Riphagen and which the
International Law Commission adopted provisionally in 1986.
256. This fundamental rule is fully applicable to the damnge caused to
Nicaragua's economic and social developrnent as briefly defined above, under
the most traditional principles of international law. See subseçtion (u), injru.
Contemporary economiç and social development and its resultirig legal conse-

quences confirm and strengthen this interpretation. See subsection (A), infru.

(a) In Accordunce ii-ithTruriitionufPrincipklvojlnternuiirinul Lui9 the United
Stute.s is Requirrd !OMake Repurutionof'thr Damage Cuzrsetl lo Nicurugua's
Bei~eloprncntPoten~iul

(i) The nuture ofthc (furnagecaused ro Nicurugua'sdereiopinrtit poteiiriul isszlcli
as IO requireu repurulion

257. The obligation to make reparatioii autornatically springs from the prin-
ciple of integral and effectivereparation (seeChap. I) which the Court established
in subparagraphs 13and 14of the Dispositif of 27 June 1986(see supra, para. I ). 258. tt is particularly well established that compensation is due not only for
the destruction itself(damnum emergens), but also for the resulting loss (Iucri~m
cessans) (see Chap. 2).

259. The rule of contemporary jurisprudence is well expressed by arbitrator
Asser in the Cape Horn Pigeoncase :

"Considering that the general principle of civil law according to which
the damages should include an indemnity, not only for the loss suffered, but
also for the profit of which one has been deprived, is equally applicable to
international litigation, and thüt in order to apply it, it isnot necessary that
the amount of the profit of which one is deprived should be exactly
determined, but that it suffices to show that in the natural order of things
one would be able to realize a profit of which one is deprived by the act
which gives rise to the claim;
Considering that in this case it is not a question of indirect damage, but
of directdamage, the amount of which should be estimated." (29 November
1902: RIAA, IX, p. 65.)

260. Under this principle, the arbitrator ordered Russia to pay compensation
for the loss of the fishing season caused by the unlawful seizure of the Cape

Horn Pigron. (See afso, the William Lee case, Mixed Cfairns Commission, U.S.
v. Peru, 27 November 1863, RIAA, II. pp. 282-287; the sentence rendered by
F. de Martens in the case of the Costci Rico Packet, 25 February 1897, Moore,
1. Arh.,pp. 4949 et seq. ; and examples quoted by Whiteman. Damuges in Inter-
nutio~iulLaw. 1937,pp. 1251et seq.).
261. International arbitral tribunals have also ordered çompensation to be
paid for lost crops, the Poggioli case, 1903, RIAA, X, p.669; Fritilleboiscase,
Mixed Claims Commission, France v. Me-~ico, 15 June 1929. RIAA, V,
pp. 543-544 o)rfor the loss of possible profit caused by the unlawful disturbance
to the normal course of business. Thus in the Irene Roberts case, Commissioner
Rainbridge declared :

"Under these circumstances, well-established rtiles of international law fix
a liability beyond that of compensation for the direct loss sustained (...).
Tlie derangement of Mr. Quirk's plans, the interference with his favourable

prospects, his loss of credit and business, are ail proper elements to be
considered in the compensation to be allowed for injury to be s~stained.~
(1903,Ralston, Venezlrulc1 1rbs., p. 145.)

262. This position was also adopted by the Permanent Court of International
Justice in the Cliorzbiv Facrory case. After laying down the rule on effective
reparation (see Chap. 1) the Court continues :

"This conclusion particularly applies as regards the Geneva Convention,
the object of which is ta provide for maintainance of economic life in Upper
Silesia on the basis of respect for the sralus quo. The dispossession of an
industrial undertaking - the expropriation of which is prohibited by the
Geneva Convention - thus involves the obligation to restore the under-
taking and. if this is not possible, to pay its value at the time of the
indemnification, which value is designed to take the place of restitution
which has become impossible. To this obligation in virtue of the general
principles of international law, must be added that of cornpensating loss
sustained as the result of the seizure." (1928. P.C.I.J., Series A, No. 17.
pp. 47-48 ;see also the dissenting opinion of Lord Finlay, p. 71.)300 MILlTARYANI) PARAMILITARYhCTIVITIES

263. Further, the Court did not exclude

". . . the possibility of taking into account another dumage which the
Companies may have sustained owing to dispossession, but wlzichis olltsirle
the undertukingitself" (ibid.,p. 49; italics added).

It is clear that the Court had in mind not only the loss of profit direçtly incurred
by the companies in question but also the negative repercussions they may have
suffered as a result of the unlawful dispossession. This appears from the nature
of the questions that the Court submitted to the experts it had appointed. After
asking them to evaluate

"the financial results, expressed in Reichmarks current at the present tinie
(profits and losses)which would probably have been givenby the undertaking
thus constituted from July 3rd, 1922, to the date of the present judgment,
if it had been in the hands of the said Companies",

it instructed them to determine the value of the undertaking if it "had been
developed proportionally on lines similar to those applied in the case of other
undertakings of the same kind ..." (ihid.,pp. 51-52).
264. The parties finally settled the case by negotiation (cf. Order of 25 Muy
1929, P.C.I.J., Series A, No. 19). so the Court did not have to reach conclusions
as to the existence and amount of the injury. But the quoted passages in its
Judgment of 13 Scptember 1928demonstrate that such injury could include not

only the profit losses of the plant itself but also the negative repercussions of the
latteron al1the other activities of the enterprise.
265. The Court's Judgment in the ChorzriivIirrctorycase was interpreted in
this manner by the United Kingdom in its Mernorial in the Angln-Iraniun Oil
Co. case. After quoting the Judgment of 1928,it adds:

"According to these principles, the compeiisation would have to cover the
value of al1the property of the Company in Iran of which the Company
hüs been deprived as a result of the confiscation of this property by the
lranian Government (this constitutingthe value of the investment which the
Company had made in Iran - dumnumernergens),and in addition compen-
sation for al1the loss of prospective profits whiçh the Company had suffered
(Iztcrunzcessans). Underthis heudingof loss of prnj?tsivt~uldbe includtd not
merely an estirnate cf Ioss rf pro@ ivhiclzthe Company hud losf by the
ces.wtion of the Iranianportion of its enlrrpvise. but the loss which it had
su#èred (including, if necessary, the extra expense in which it would be
involved) by fliereclsonoftlir fact fhat thr non-Iranianportioiiofits et~t~rprise
with h'hicfzIACConlipaizyis lefi ti30uldhe un ill-balancedtrutacatedportion of
what ivusdesigneclfohe a part ofone bulancedwhole,anclwould, ttlier~fijre,
befur 1e.s.sufuubleas (Itruncafedportion ascomparedwilh ifs vulueas part
clfu whole." (I.C.J. Pleading.~,1952,pp. 117-11 8; italics added.)

See also Salvioli, op. cit., who, in analyçing Judgment No. 13 of the Permanent
Court, makeç a clear distinction between lost profits stricto sensu (pp. 261, et
seq.) and compensation due in the absence of the "dévckopprmcntnormal de
['entreprise"(the undertaking's normal developnient), page 239.
266. These principles are logically applicable to the present case. Indeed. they

are applicable a fortiori in the present case. As regards the type of loss with
which the present chapter is concerned, it is similar in nature, for Nicaragua, to
the damage caused the Bayerische and Oberschlesische Stickstofierke compan-
ies, which were the owners of the Chorzow plant in the case judged by the Permanent Court in 1928 : Nicaragua has suffered loss of production caused by
the wrongful acts perpetrated by the United States. In turn, those losses have
directly affected its economy and development potential as a whole. The resulting
damage must thus be compensated.
267. Two factors justify consideration of the damage caused by the inter-
national wrongful act of a State to the economy and development potential of
another State. First, this involves an assault upon one of the main components

of the modern State. Secondly, the degree of gravity of a breach in international
law in the case of a failure to respect the duty of due diligencein the protection
of foreigners cannot be compared to a predetermined policy, decided at the
highest governmental level, of deliberately harming another sovereign State (see
Chap. 2). There is no doubt that the unlawful action of the United States had
the very object of damaging the Nicaraguan economy and development potential
(see Chap. 5, paras. 156-163).
268, The Arbitration Court on Damages iciPortrrgitesr Coloniesheld:

"[Ill ne serait pas équitable de laisser à la charge de la victime les
dommages que l'auteur de l'acte illicite initial a prévuset peut-être voulus,
sous le seul pretexte que, dans la chaîne qui les relie à son acte, il y a des
anneaux intermédiaires"(1928, RIAA, II, p. 1031) '.

(ii) The qit~stionc.fcuusality

269. As explained by Edwin B. Parker, Umpire of the American-German
Claims Commission of 1922 in the case of the Wur-Risk InsuruncePremiwn
Clcrims,the word "indirect" is "inapt, inaccurate and ambiguous" and the
"... distinction between 'direct'and 'indirect'damage is frequently illusory
and fanciful and should have no place in international law" (RIAA,
VII, pp. 62-63 - see also Garcia-Amador, 6th Report, op. cil.,para. 159.

p. 40).
270. The applicable principle has been fixedwith great clarity in administrative
decision No. 2 of the American-German Commission of 1 November L923:

"The proximate cause of the loss must have been in legal contemplation
the act of Germany. The proximate result or consequence of that act must
have been the loss, damage, or injury suffered. The capacity in which the
American national suffered - whether the act operated directly on him, or
indirectly as a stockholder or otherwise, whether the subjective nature of
the loss was direct or indireçt - is immüterial, but the cause of his suffering
must have been the act of Germany or its agents. This is but an application

of the farnifiar rule of proximate cause - a rule of general application both
in private and public law - which clearly the parties to the Treaty had
no intention of abrogating. It matters not whether the loss be directly or
indirectly sustained so long as there is a clear, unbroken connection between
Germany's actand the loss complained of.It matters not how many links
there may be in the chain of causation connecting Germany's act with the
loss sustained, provided there is no break in the chain and the loss can be
clearly, unmistakably, and definitively traced, link by link, to Germany's

' ttwould not be fair toleavethe victim to beartheconsequencesof damages that the
perpetratorof the initiaunlawful act has providedfor and perhapsevenintended,simply
on the pretextthatin the chain connectingthem to hisactthereareintermediate links.302 MILITARYAND PARAMILITARYACTlVITlES

act." (RIAA. VI[, pp. 29-30 ; see also the award of the German-Portuguese
Arbitration Court of 31 July 1928,mentioned above, para. 38.)

271. Contemporary doctrine concurs with this view :
"Whenever an international liability arises, there is a duty to make
complete compensation and therefore for al1the prejudicial consequences of
the occurrence giving rise to the liability whether the damage thus ensuing
is direct or indirect." (Ynterna, op. cit., p153.)

"AI1damages which can be traced back toan injurious act as the exclusive
generating cause, by a connected, though not necessarily direct, chain of
causation, should be compensated." (Eagleton, The Rrsponsihility cf Slutes
in IntertautionalLaw, 1928,p. 202.)
"Doivent êtreconsidéréscomme conséquencesde l'acte dommageable et
doivent par conskquent êtrepris en considération pour l'appréciation de
l'étenduede l'obligation de rkparer. tous les faits qui sont reliés à I'acte

originaire par un lien de cause i effet, en d'autres terme tous les faits
desquels on peut remonter jusqu'a I'acteprimitif par unechaîneneprésentant
aucune solution de continuité." '(Personnaz, La réparutioti rlrprijlrdiceen
droit it~ternuiional,1938,p. L36.)
(See also A. Hauriou, "Les dommages indirects dans les arbitrages interna-
tionaux", RGDIP, 1924, pp. 203-231, pussini. in particular p. 227 ; Salvioli.
op. cit,, pp. 224 and 246; Jiménezde Aréchaga,op. cit., pp. 568-569;Bollecker-

Stern, op. cif., pp. 221.et seq.: Verzijl.I~itertiutionulLaw iti HistnriculPerspectii-e,
1973, pp. 743 and 756; 1. Brownlie, op. cit., pp. 225-227; Nguyen Quoc Dinh,
Daillier et Pellet, Droir internutii~nalriblir, 1987,p. 697; etc.)
272. The position was üptly siimrned up by the Government ofthe Netherlünds
in its reply to the questionnaire of the Preparatory Cornmittee of the Hague
Conference in 1930 :
"Sans faire de distinctions plus ou moins artificielles de 'dommage direct'

et 'dommage indirect'. il faut indemniser le dommage ui doit être considéré
comme ttant la conskquence du fait imputé i l1Etat'" (SDN, Piiblicaiinnr,
C.75 (a), M.69(a), 1929, V, p. 149).
273. The causal relütionship isthus the only condition for the compensation
of damage caused by an internationally wrongful act in international law. This
condition is without doubt fulfilled in the present case.
274. The acts perpetrated by the United States and held by the Court to be

contrary to international law are the determining cause of the GDP loss and the
social losses that have affected Nicaragua since 1981.
275. There are two ways of establishing this causality. The first is to take each
of the acts for which the United States isresponsible and determine the harmful
consequences for Nicaragua. The second is to start from the losses incurred by
Nicarügua and trace them back to their original cause. Both approaçhes lead to
the same conclusion :the United Stateshas caused enormous harm to Nicaragua,
and it has done so deliberately.

'The followingshouldbe regarded asiheconsequences of theinjuriousact and thusbe
taken into considerationin assessingthe obligationto makercparatioii :al1factsrclated
to the originalüct by acausal relationship,or in other words,al1factswhichlead up to
the Withoutmakingthe more orlessartificialdistinctionbetween"direct" and "indirect"
damage, reparatian rnust be made for the dümage which must be regarded as the
consequence ofthe act attributed tothe Statc. 276. The Government of Nicaragua will cite two exarnples of the first of these
approaches :
277, (i) On 13 Septernber 1983, "an underwater oil pipeline and part of the
oil terminal at Puerto Sandino were blown up" and on 15 October 1983 "the
underwater pipeline was again blown up" (Militury und ParurnilituryActivities
in und uguinst Nicuraguu, Merits, Jun'gmenIt .,.J. Repnris 1986, p. 48). The
Court recognized that these attacks were attributable to the United States (ibid.,
p. 50) and in breach of both the principle of international customary law which

bans the use of force in international relations, the obligation not to violate
the sovereignty of Nicaragua, and the Treaty of Commerce, Friendship and
Navigation of 21 January 1956 (ihid., Dispositif? subparas.4, 5, 10 and 11,
pp. 147-148).
278. AsNicaragua has demonstrated in Chapter 3 above, damages caused by
these attacks to petroleum installations and the resulting loss of petroleum
amount to US$410,000.
279. However, this amount represents only a small part of the loss inçurred
by Nicaragua as a result of the attacks on Puerto Sandino. It must be recalled
that virtually al1 oil imported by Nicaragua arrives at Puerto Sandino and
proceeds from there to Managua through a pipeline. Hence, the loss of petroleum
that was being stored in Puerto Sandino and the unavailability ofthe oil terminal
for several months had immediate repercussions on a large number of industrial
activities, in particular the chemical industry and electricity generation.n turn,
the reduction of electrical power supplies led to reduced activities in many
industries, whence a more general reduction in the gross national product and
in the population's standard of living. Moreover, the need to replace the lost oil
and to rebuild the destroyed installations has prevented the Government of
Nicaragua from making other productive purchases abroad and generating the

value added from combining the imports with domestic resources.
280. (ii) The same is true of the trade embargo imposed by the Executive
Order of the President of the United States on 1 May 1985(Ann. IX.1 ),which
the Court declared contrary to the object and purpose of the FCN Treaty of
1956and to the obligations of Article XIX of that Treaty (I.C J. Repnrls IY86,
pp. 138, 140and subparas. 10and 11 of the Dispositif, p. 148).
281. The Nicaraguan Government has demonstrated in the previous chapter
that this unlawful action caused the irreparable loss of perishable goods,
reductions in export earnings, much higher import costs?and production losses
directly linked with the inability to export. The resulting loss due to losses from
the general embargo on trade (US$254.4 million) and the GDP losses denied
therefrom (USs381.6 million) amounts to at least US$636 million.
282. Yet again, this amount is far from sufficient to cover the actual loss
incurred by Nicaragua. The faIl in activity was not confined to export-oriented
;igriculturaI and industrial production. These economic activities are also con-
surners of goods and services produced in Nicaragua, whose producers were also
affected by the embargo. Furthermore, the income of the farmers, workmen and
entrepreneurs in those industries was reduced; their purchases, savings and
investment accordingly fell.
283. Here again, the immediate and direct source of these negative reper-

cussions is to be found in the general trade embargo imposed by the United
States in breach of its international obligations.he causal relationship between
the internationally wrongful act and the damage is thus amply demonstrated.
284. Many more examples could be supplied, either in connection with the
Liseof force by the United States against Nicaragua as in the mining of the ports,
or the damage caused by the United States breach of the principle of non-304 MILITARY AND PARAMILITARY ACTIVITIES

intervention, as found by the Court, by the "Support given ... to the military
and paramilitary activities of the cnntrus in Nicaragua". (1.C.J. Reports 1986,
para. 242.)
285. However, as indicated above (para. 275) thiscausal relationshipmay also
be established adequately in anotlier manner, by starting not from each of the
wrongful acts attributable to the United States but from the damage which was
incurred by Nicaragua, and followingthe chain of circumstancesthat caused it.

286. It is relatively easy to determine, on the basis of reliable and objective
international sources, theamount of GDP loss.
287. A rigorous evaluation of Nicaragua's growth prospects was carried
out in 1981 by an oflicial mission of the World Bank when relations with the
Government of Nicarügua were normal. Nicaragua - The Challengeof Recon-
sfruclinn(deposited with the Court). This report indicated growth scenarios for
the upcoming years. The question arises as to why the development forecast in
that careful study was not achieved.
288. The World Bank was fully aware of the reconstruction policy being
carried out since 1979by the Government and they made explicit reference to
the objectives and methods it had set itself. In the synopsis which appears at the
beginning of the document it is stated :

"The behaviour of the economy during the recovery period is analysed,
particularly with respectto the development of the major productive sectors,
agriculture and industry, and to Government policies regarding money and
credit, public finances,invcstment, and foreign borrowing." (Ibid -. see
also for example pp. 4 et seq.)
289. Subject to certain adjustments necessitated by the situation of confiict

imposed upon it by the United States, the Government of Nicaragua largely
adhered to the economic policy envisaged in the report. (See Government of
Nicaragua, Economic Policy GuidcEines, 1983-1988, Fondo Internacional de
Reconstruccion, Managua, 1982.)The report also mentions "the less favorable
internationalenvironment expected for the 1980s" (seeibid., p. 49). The deterior-
ation in the economic climate cannot be held to be responsible for the present
situation. The Bank was, moreover, quite awüre of the vulnerability of the
Nicaraguan economy to external shocks. "... Nicaragua is highly vulnerable to
various shocks" (ibid., p. 57). This analysis leads to the inescapable conclusion
that it is thenlawful acts of the United States which explain why these forecasts
could not be achieved. They are the main variabtes which the Bank's mission
was not able to take into account.
290. Morzover, al1economic analyses highlight the role of the hostile acts of
the United States in the disappointing performance of Nicaragua's economy.
The 1987ECLAC study of Nicaragua's economy notes:

"Throughout this report. the effects of the armed confiict during the last
fewyears on the performance of the economy have been shown. Particularly
during 1987 its repercussions have been one of the most adverse factors."
(Ann. V.l, p. 7.)

The analyses of qualifiedeconomists point in the same direction (see,for example,
S. Maxfieldand R. Stahler-Sholk, "External Constraints" in Th. W. Walker, ed.,
Nicurog~ta - TheFirst Five Yrurs, 1985, pp. 235-264; or E. V. K. Fitzgerald,
"An Evaluation of the Economic Costs to Nicaragua of U.S. Aggression:
1980-1984" in R. J. Spalding, ed., The Political Economy of Revoiuiionary
Nicaragua, 1987,pp. 195-213).
291. The Nicaraguan Governrnent does not deny, however, that in recentyears, some other factors have affected Nicaragua's development,but in a much
less serious manner. These are principally the natural catastrophes from which

the country has suffered, such as floods and drought in 1982.The former were
assessed as causing some US207 million worth of damage to infrastructure and
housing (seeCEPAL,Repercusionesde losfenomenos meterologicosde 1982sobre
eldesarrol/oeconomico y socialdeNirurugua(E/CEPAL,MEX/I 983/L.1 ),Mexico
City, 1983).Nonetheless,the impact of these latter elementsupon the Nicaraguan
economy - which may be calculated in a reasonably precisemanner - although
considerable, are in no waycomparable with the effectsof the wrongful acts that
are attributable to the United States. In any case, the method followed belowto
calculate the lossessufferedby the Nicaraguan economy as a consequenceof the
wrongful acts of the United States is based on the economic results achieved,
and thus already takes into account such exogenous factors.
292. In conclusion, the Governrnent of Nicaragua wishes to stress that its
dernonstration of the existence of acausal relationship between the damage and
the internationally wrongfulacts committed by the United States is inconformity
with the traditional practice of international tribunals.

293. Hence in the CapeHorn Pigeoncase, Arbitrator Asser observed:
". .. that it suflicesto show that in the naturalorder ofrhingsone would be
able to realizea profit of which one is deprived by the act which gives rise
to the claim" (29 November 1902, RIAA, X, p. 65 - italics added); see

also 30 December 1896,the Fahiunicase, in La Fontaine, Pusicrisieinternu-
tionale, p. 165; the Tribunal stated that the darnage must be vafuated
according to "lecoursordinairedeschoses"["the ordinary courseof events"].
294. This was also the attitude of the Permanent Court in the ChorzbwFactory
case. In its Judgment of 13 September 1928,the Court instructed the experts it

had designated to envisage "hypothetically but probably" the results that the
enterprise would have achieved if "it had been able to continue its supposedly
~tormaldevelopment" (1928, P.C.I.J., Series A, No. 17. p. 52 - italics added).

(b) Thr Legal RelevanceofContemporuryEconomicand Social Trendsand
Emergent PrinciplesofInternationalLuw
295. However, the interpretation and application of traditional principles of
international law

". .. cannot remain unaffected by the subsequent development of law.
through the Charter of the United Nations and by way of customary law.
Moreover an international instrument [as well asan international ritle]has
to be interpreted and applied within the framework of the entire legalsystem
prevailing at the time of the interpretation" (I.C.J., Advisory Opinion of

21 June 1971,Legul Consequence.sJi)rStates of the ContinueclPresence of
South Africa in Nnrnibia ... I.C.J. Reports 1971, p. 31 ; see also Advisory
Opinion of 16October 1975, WesternSahara, 1. C.J. Reports 1975, p. 32).
296. Trends in international law refiecting contemporary political, economic
and social changes have strengthened the conclusions in subsection (a),above.

First, the inevitableinteraction of contemporary economiesjustifiesconsideration
of the impact of the breaches of law cornmitted by the United States (i); and
secondly, the emphasis on development and the new international economic
order confirmthat theattacks upon Nicaragua's economicand socialdevelopment
potential have to be compensated (ii).306 MILITARY AND PARAMILITARYACTIVITIES

(i) The infrructiancfcantemporury econrinzie.~
297. Traditional jurisprudence takes account of the general economic and
social context surrounding the dainages for which reparation was requested (see

supra,paras. 246 et seq.).
298. In the ChorzriwFclctorycase, the Permancnt Court was mindful that the
object of the Geneva Convention of 15May 1927concerning Upper Silesia was
to ensure "the maintenance of economic life in Upper Silesia" (1928, P.C.I.J.,
Series A, No. 17, p.47). Such concerns are sven more valid when the national
economy itself is threatened (see supra,para. 265 and Chap. 5, secs. A and B).
299. Today, whatever the nature of the economic and social system -
capitalist. socialist or mixed - the State bekirs responsibility for national
economic prosperity. This basic conception which is reflected most prominently
in the system of national accounts (see United Nations Statistical Office, A
Systerriof National Accaunts: Stucfies in Methorls.Series F, No. 2, Rev. 3' New
York, 1968)necessarily affects the development of the law.

300. Professor Paul Reuter, among others, has applied this idea systematically
in the field of international law on State responsibility. Thus, according to this
author :
"Le préjudice de 1'Etat et celui du particulier, lorsqu'il s'agissait d'une
perte patrimoniale privée,étaient parfaitement distincts à l'époquelibérale.
Mais la collectivisation des risques par l'assurance facultative, puis obliga-

toire, patrimoniale puis sociale - les nationalisations l'accroissement massif
du prélèvementfiscal surle revenunational, - toutes les manifestations de
la cornpénétrationde la richesse nationale et de la richesseprivée, symbolisées
techniquement par la comptabilité nationale, ont fait de la fiction une
réalite- une perte individuelle est aussi une perte collective et 1'Etat est
pliis encore le représentant de la collectivité nationale que le titulaire de
biens propres." ' (P. Reuter, Lu responsabilitéinternutiorrale,1956, p. 110;
see also Droi tnternationalpublic. 4th ed., 1973,p. 189,and "Le dommage
comme condition de la responsabilité internationale", in Estudiosde Bereclio
I~iicrncicional- HomenaJda?l ProfesorMiuj~lde la Mueka,1979,Vol.II. 842.)

301. Similarly, in his separate opinion in the Barcebnu Traction. Light und
Power Company,Limitcd, case, Judge Gros says:

"[Tlhe economic world today exhibits phenomena of State intervention
in and responsibility for the economic activity of the subject within the
national territory or abroad which are so frequent and thoroughgoiiig that
the separation of the interest of the individual from that of the State no
longer corresponds to reality." (I.C.J. Reports 1970, p. 269.)

302. ln modern cirçumstances, it is proper to takeinto account al1the negritive
economic consequences caused by the wrongful acts of one of the parties, to the
other party. For States, their global economic losses mutatis mulundisrepresent
the equivalent of the traditional Iucrumcessun.y.

'The prejudiceof the Stateand rhat of the individual,in the caseof private loss of
assets,wereperfectlydistinctfrom one anotherduring the liberalperiod. However,the
collectivisationof risksbyoptional- thencompulsorypatrimonial,thensocialinsurance
nationalization- themassiveincreaseof taxlevieson nationalincome - al1thesebeing
signsof the merging of national andprivatewealth,technicallysymbolizedby national
accounts,haveturned fictioninto reality:an individuallossis also a collectivelosand
theStateisrnuch moretherepresentativeofthe national community than theowncrof its
ownwealth. 303. These principles have been formally adopted on many occasions in
contemporüry law.
304. Thus! for example, Article 91 of Additional Protocol No. 1 of 1977 to

the Geneva Conventions of 1949 stipulates:
"A Party to the conflict which violates the provisions of the Conventions
or of thisProtocol shall, if the case demands, be liable to pay compensation.
it shall be responsible for afl acts çommitted by persons forming part of its
armed forces."

This provision, which had been the object of an amendment submitted at a late
stage by Vietnam at the Diplomatic Conference on the Reaffirmation and
Development of international Humanitarian Law Applicable in Armed Conflicts,
çhould be read in the light of its trurau.upréparuiniru.s.
305. The latter are surnmarized by Professor Ph. Bretton:

"Le représentant de la RSVN justifia l'insertion de cette disposition dans
le protocole 1en faisant valoir qu'elle s'imposait pour réparerles destructions
et les dommages résultantdes guerres d'agression coloniales et nèo-coloniales
imposées par l'agresseur sur le territoire même de peuples faibles et mal
armés, dans des pays d'Asie, comme ce fut le cas au Vietnam, et dans des
pays d'Afrique." [CDDI+/l/SR67, 26 avril 1977, p. 2.1 "Du point de vue
juridique, il est intéressant de relever que les dommages viséspar l'auteur
de ce texte comprenaient i la fois les dommages directs rt les dommages
indirects résultantdu retard préjudiciable au développement de l'économie
nationale." ' ("L'incidence des guerres contemporaines sur la réafErmation
et sur le développement du droit international humanitaire applicable dans
les conflits armésinternationaux", Chnet, 1978,p. 243.)

306. This text was adopted by consensus both in the Coinmission and in
plenary session, that is without opposition from the United States - which,
inoreover, also failed to oppose the adoption of resolution 3213 of the
United Nations General Assembly of 14 October 1977 concerning aid for the
reconstruction of Vietnam.
307. Thus in the friimework of law applicable to international ürmed conflicts,
it is for the whole of the damage caused to the economies of victim States

that reparation is due, including that resulting from "prejudicial delay in the
tlevelopment of the national economy".
308. Furthermore, in connection with several recent affairs connected with
acts of aggression or unlawful intervention in the domestic affairs of various
States. the SecurityCouncil set up missions to assess the damage caused by these
wrongful acts. In al1 cases. the damage caused to the development potential of
the country concerned has been taken into account by the hct-finding mission,
even when the latter had stüted its inability to make a precise evaluation of the
amount in question when it handed in its report:

- in 1977,the consultantexperts designated under resolution 405 of the Security
Council to assess damage caused by the attack of 16 January 1977 against

'The reprcsentativeof theSRVN justifiedthe insertionof this provisionin Proto1ol
on the grounds that it was necessaryin order to compcnsale forthc destruction and
damagccaused by colonialand neo-colonialwarsimposed by theaggrcssorson theactual
territoryof weükand poorlyarmcdpeoples,in the countriesof Asia. as wasthe casein
Vietnam.and in countries of Airica. Legallyçpeaking,it isintcrcçtingto note that the
damage referredto by the author of the text includesboth direct andindirectdamage
caused by "the prejudicial delayin the developmentof the nationalcconomy".308 MILITARY AND PARAMILITARY ACTIVITIES'

Benintook into account the "consequences ofthe aggression on the national

economy" (because of the lost working hours and psychological climate of
fear), the threat to the country's developmentand extra expetrditure incurred
[or security purposes (doc. 5112415, pp. 30 et seq.);
- in 1980,the Special Committee set up under resolution 455 of the Security
Council of 23 Novernber 1979,in assessingdamage caused to Zambia by the
acts of aggression of the Smith régimein Rhodesia, took account not only
of material damage and losses connected witli exports and imports but also
their repercussions on the Zainbian economy as a whole (doc. Sl13774, in
particular p. 35);
- in 1982,the report by the fact-finding Committee which had been set up
under resolution 496 (1981) of the Security Council to calculate and assess
the economic damage caused by the attacks rif mercenaries in the Seychelles

Islands was based not only on the cost of rebuilding the airport but also on
the reduction in receipts of the tourist industry and on the multiplier effect
of these losses on the whole of the economy (S/14905/Rev. 1, p. 54 and
Ann. IV, pp. 85 et seq.);
- in 1985,the mission sent to Botswana under resolution 568 (1985) of the
Security Council referred not onty to the ioss of human life and personal
injuries, and damage caused by South African attacks, but also the cost
engendered by the climate of insecurity and additional security expenditure
(S/17453,pp. 94 and 99) ;
- in the same year, the hct-finding Committee set up under resolution 571
(1985) of the Security Council emphasized the damage to the Angolan
economy caused by attacks from South Africa (S/17468, p. 134) and the
Council demanded that South Africa should make full reparation to Angola

(resolution 577 of 6 December 1985).(Al1relevant documents are deposited
with the Court.)

309. These precedents are of obvious relevance in the present context. II the
aforementioned interventions and attacks juçtified the taking into account of
damage caused to the economic and social development potential of the victim
States. this isa jjriiori the case in view of the repeated armed attacks and the
continuous interference in the domestic affairs of Nicaragua by the United States
since 1981.
310. Moreover. in resolution 38/10af 11November 1983concerning"the situa-
tion in Central America", the General Assembly

"3. Conde»tnsthe acts of aggressionagainst the sovereignty,independence
and territorial integrity of the States of theegion, which have caused losses
in human lifeand irreparable damage to their economies, thereby preventing
them from meeting the economic and social development needs of their
people ; especiallyserious in this context are:

(a) The attacks launched from outside Nicaragua against that country's
strategic installations,such as airports and seaports, energy storage
facilities and other targets whose destruction seriously affects the
country's economic lifeand endangers densely populated areas."

311. Thus, in conformity with the practjce usually followed by the Security
Council in aîkdirs of this kind, the General Assembly, in relation to the case
which is now before the Court, expressly considered that the damages suf-

fered by Nicaragua included those which compromise the economic and social
development of that country. MEMORIAL(COMPENSATION) 309

(ii) The impact of internationallaiv ofdevelnpment and the requirementsof the
IZEWinternationalecnnomic nrder

312. Among the changes that international law has undergone over the last
decades the most marked has probably been the spill-over of development
considerations into the legal sphere. As Judge Bedjaoui has written:

"Over and above the conflict of interests between industrialized States
and States of the Third World, there is, al1the same, a general agreement
of principle betweenthem, although doubtless for diKerent reasons and
leading to differentaction in each of the two groups, that the poor countries
must develop, thus giving effect to the United Nations Charter which,
already more than 30yearsago, made developmentan international problem
par excellence, of concern for the whole world çommunity." (For a New
Intcrnntion~~ElconnmicOrdur, 1978. p. 138.)

313. In 1970, Judge Jessup had already predicted that ". . . the law of
internationaleconomiç development willmature" (Judgment of 5 February 1970,
separate opinion, I.C.J. Reports 1970, p. 166). As of now, it may be stated that
law has greatly "rnatured" and it is international law as a whole which has now
become irnpregnated by the concept of a "new international economic order"
consecrated by the General Assemblyin 1974.
314. Among the principles, adopted by consensus in 1974, on which the new
order would be based are the foliowing:

- "The right of everycountry to adopt the economic and social system
that it deems the most appropriate for its own development",
- "Full permanent sovereignty of every State over its natural resources
and al1economic activities", and
- "The need for developing countries to concentrate al1 their resources
for the cause of development" (United Nations General Assembly,
A/RES/3201 (S.VI), Declaration on the Establishment of a New Inter-
national Economic Order, 1 May 1974,para. 4 (ri))(e) and (r)).

315. These principles, whichfirmly establish the right and duty of each State
fo develop freely according to the system ithas chosen, are embodied in the
Charter of Economic Rights and Duties of States of 12 December 1974.
316. In addition, and this is of particular relevance in the present case, the
13eclaration on the Establishment of a New International EconomicOrder pro-
claims :

"The right of al\Stütes, territoriand peoples under fo~eignoccupation,
alien and colonial domination or ripurtheidto restitution and full compen-
sation for the exploitation and depletion of, and damages to, the natural
resources and al1other resources of those States, territories and peoples"
(para.4 (f)).

317. ltis interesting to note that, in the situations çovered by the aforemen-
tioned text, it is compensation for damage csused to the economic and social
development potential of the countries considered that is demanded.
318. Another pertinent developmentofcontemporary international law iscon-
nected with the recognition, for al1 peoples and human beings of a right to
development of which, as spelled out by the General Assembly of the United
Nations in the Declaration on the Kight to Development of 4 December 1986,
the realization

". .. requires full respect for the principles of international law concerning310 MILITARY AND PARAMILITARY ACTIVITIES

friendly relations and co-operation among States in accordance with the
Charter of the United Nations".

319. As shown by Judge Keba M'Baye, the right to development is not a
vague concept de Iege,fertindalt is, without any possible doubt, part of positive

international law (cf. "Le droit au développement comme undroit de I'hommeWl
H.R. Rev., 1972, pp. 503-534; "Le droit au développement" in the Hague
Colloquium, 1979, The Riglzr tn Dev~lopmentut the Internutiotlal Leilel, 1980,
pp. 88s; "Le droit au développementen droit international", Me!. Lachs, 1984,
pp. 163-177; see also A. Pellet, "Note sur quelques aspects juridiques de la
notion de droit au développement", in M. Flory, cd., Lafi~rniation drivnormes
en droit internutionu!rludéveloppen7rn11,984,pp. 71-85).
320. In the very recent past a Court of Arbitration consisting of three Judges
of this Court gave particular recognition to the right ofii people "to a level of
econoinic and socialdevelopment which fully preserves [its]dignity" (De!inzitriiion
of the Moriiiine BoirndurybctrileenGui?ieuand G16ineri-Bissaz114, February 1985,
ILM, 1986, Vol.XXV, No. 2, p. 302). Moreover, the Tribunal refrrred to "the

economic preoccupafions so legitimately put forward by the Parties" jihicl).
321. Consequently, any breach of this right calls for reparation. Moreover,
whenever a breach of international 1awhas harined the potential for economic
and social development of a State, the damage must be coinpensated. The
wrongdoer is responsible both on account of the initial breach and the breach
of the resulting right to development. In cases of this kind, the obligation to
make reparation has a two-fold basis.
322. ln the present case, the United States has seriously injured Nicaragua's
economic and social development potential (see supra, para. 231 to 233 and 277
to 290). At the same time. the United States violated Nicaragua's right to
deveiopment in that it deliberately endangered the

". .. comprehensive economic, social, cultural and poltical process. which
aims at the constant irnprovement ofthe well-being of theentirc population
and of al1 individuals on the basis of thcir açtive, Sree and meaningful

participation in development and in the fair distribution of benefitsresult-
ing therefrom" (Declaration on the Right to Development. Preamble,
para. 2).

323. The United States obligation to make reparation is based both on
breaches of international law attributed to the United States that causeddamage
to Nicaragua's potential of development, and on the actual existence of that
damage, which infringes Nicaragua's right to development.
324. The United States is obliged to make reparation for the harmful conse-
quences of its internationally wrongful acts, including GDP losses and social
losses. The most recent principtes confirm the conclusions derived from the
application of the most traditional rules ofjus gentiurnto the subject-matter.

Section B. Reparation Due to Nicaragua

325. As in the case of the otlier categories of tnjury to Nicaragua from the
internationally wrongfui acts of the United States, the cardinal principle is
integral and effective reparation of the damage to Nicaragua's development
potential (see Chap. 1). (a) The Ceneru!Principles Applicuble to the Evaliiation of Dumage Cuused tu
Nicuraguu '.Bevelopment Pofentii~l

(i) Grnerulconsidercrtionson the eiirentcf~hedarnuge

326. As shown in Section A of Chapter 5, the Nicaraguan economy is
extremely vulnerable due to its uriderdeveloprnent and trade exposure. These
structural problems were exacerbated by the costs of fighting the Somoza
dictatorship, which bled the country dry {ihid). The combination of these two

factors explains why this country was so susceptible to external shocks (see ibid.).
327. Despite these handicaps, the World Bank drew attention to the country's
economic potential in its report of 9 October 1981, The Challt~ngeofRecon-
.srrucrici:
"Nicaragua is favored by a number of conditions conducive to a high
rate of economic growth. It has a low population/land ratio and abundant

rich volcanic soils, its metal mining potential is good, and the core of the
transport infrastructure network is well established." (P. 34.)
328. In 1979,the new government set itself the priority task of reconstructing
the national economy with a view to bringing about social justice and by 1980
its efforts began to bear fruit (see Chap. 5, Sec.A).
329. Nevertheless, Nicaragua's development prospects are heavily dependent
upon three factors :

- agriculture, which al1 experts agree is the principal motive force behind
growth (see World Bank, op. cil.p,p. 34-35);
- guaranteed access to energy. in particular fossil fuel, which is the principal
source of electrical energy (seeihid. p. 34);
- transport, including roads in ports and airports, because of the crucial

importance for the economy of foreign trade (see Chap. 5, supra, Sec.A).
One of the main objectives of the United States rnilitary and paramilitary
activities was the weakening of these three sectors.
330. This destruction has underrnined the country's economic structure. Tt
ihus has a long-term etfect, and the breaches of international law are still con-
iinuing.

331. If, for example, a cornfield is burnt before the crops have been harvested,
the crop is lost. This obviously places the farmer and his hmily in a difficult
situation. but the loss of his output and his purchasing power has repercussions
on the economic activities of other sectors. Yet, if assistance is given, a crop may
be planted and harvested again in the following year.
332. A cofiee plantation is more cornplicated: a coffee shrub produces coffee
only rifter five or six years on average. Thus, after repeated acts of destruction
or years of inattention due to fear of being killed. the coffee-grower must
abandon his land and take refuge in the towns, where he willjoin the army of
iinemployed with al1the attendant social and urban problems. The burning of
forests has similar results.
333. In the same way, the destruction of a bridge niay isofate an agricuftural
region completely, preventing it from trading in its produce with resulting loss
in purchüsing power for the peasdnts, supply difficultiesfor city dwellers, price
increases which are practically impossible to prevent and resulting macro-
economic and social effects.

334. The bombing of an oil plant causes the loss of the oil stored there and
the expenditure of additional currency in order to replace it. While it is down,312 MILITARYANI) PAKAMILITARY ACTIVITIES

the electric plant can no longer produce electricity and factories are paralysed,
beingcompelledeither to lay offtheir employeesor to pay them for doing no work.
335. In each of these cases the loss for the Nicaraguan economy appears as a
decrease in national output (measured as Gross Domestic Product - GDP) and
can be analysed as the result of eithea decline in export income or an increase
of indebtedness. The losses by their very nature are spread over a period of
several years. In the opinion of the Nicaraguan Government, there are two main
consequences to be drawn from this from the legal point of view.
336. Thus, the lossesincurred to date do not represent the appropriate amount
of reparation. Unlike material damage strictosrnsz(seeChap. 2) it is impossible
to assess their replacement value. The only possibility is annual calculations of
the lossin national income consequent upon the immediate losses from United
States unlawful acts, as from 1982to the present.
337. Secondly,the harmful effectsof the wrongful acts of the United Stateshave

not ceased.In other words,although there isno doubt whatsoeverthat the prejudice
existsand that it requires compensation, the complete evaluationof that prejudice
is, at this stage, extremelyfficult(for the concliisionwhich the Applicant State
respectfullydraws in this context, seeConclusion, infra, paras. 477 to 483).

(ii) Gene.1 rulesfor rheevulualion (>ftheprejudice causrd EoNicarugua

338. Any difriculty encountered in determining the amount of compensation
should not serve as a pretext to refuse reparation. Otherwise the wrongdoer
would be placed in a position of undue advantage.
339. The problem isquite different as regards the two aspects of developmental
loss: the reduction in Gross Doinestic Product consequent upon production and
trade losseson the one hand and the social consequencesof attacks and economic
sanctions on the other.
340. The first category of such damage may be assessedina fairly preciseman-
ner based on customary methods of econometric calculation. ln the case of Nica-
ragua in particular, such an assessrnent is greatly facilitated by the macro-econo-
mic analysis model developed by the Instituto Latinoamericano de Planifica-
cion Economica y Social (ILPES), a subsidiüry body of ECLAC (Ann. JV.4).
341. The macroeconomic methodology sumniarized in Annex IV.3, for the
evaluation ofdamage caused by the intervention and attacks of the United States
(see Ann. IV.2 for an analysis of those consequences) applies the ILPES model
in order to examine the negative effect on the economy as a whole of foreign
exchange losses in exactly the same way as that in which the positive effect of a
foreign loan isconventionally estimated.
342. The social costs of the
United States internationally wrongful acts
however, require a more specialized estimate. On this point the Nicaraguan
Government summarizes relevant data (see Ann. IV.5) and presents the Court
with a global estimate that takes into consideration the order of magnitude of
the GDP loss.
343. The sum of US$1,190.5million resulting from the application of the most
relevant methodology for damages and production losses represents a strict
minimum of the damage.

(b) The Culculation of ~heAniount (iC onrpensation

(i) GDP loss

344. The methodology used to calculate damages caused by the United Stateswrongful acts to the economy of Nicaragua is explained in Annexes 1.2and IV.3
to the present Mernorial and Annex IV.2 applies that methodology. The use of
the term "GDP loss" for this loss category refers to the loss of economic
development potential in the wider sense. ln the technical sense, the validity of
the reference to Gross Domestic Product lies in the fact that the loss arises from
value-added foregone? and that GDP is the sum of value-added in al1 the
economic activities of an economy (United Nations Statistical Office, op. cil,).
345. The guidelines for this methodology are provided by the macroeconomic
model of the Nicaraguan economy produced by ILPES (Ann. IV.4), a model
which was constructed under a technical assistance programme funded by the
United Nations Development Programme (UNDP) to improve the quality of

routine economic policy analysis. This model, established in 1987,givesa general
framework for analysing the trends of the Nicaraguan economy on the short- and
medium-term. The method is based on econometric estimation of the behaviour
of the major macroeconomic variables, and endeavours to take into account any
relevant variable excluding reteris paribus, the influence of al1 others (such as
natural disasters. world market conditions, quality of economic administration,
etc.). The model permits the calculation of the effects of variations in any
macroeconomic variable (in this case, foreign exchange income) on GDP. It is
similar to those constructed by ILPES for use in other Latin American countries.
It hasbeenused here to calculate the macroeconomic consequencesof the material
damages and production losses deriving from the wrongful acts for which the
United States isliable. The results of this valuation are summed up hereinafter.
346. Each year's material damage and fosses can be analysed as a foreign
exchange loss, either as a decline in export income (in the sense that this pro-
duction was not available for export), or as an increase of indebtedness (in the
sense that Nicaragua was compelled to replace them with fresh imports). In both
respects, they have been a burden on the balance of payments current account.
Hence, the effectsof this constraint on the Nicaraguan economy can be calculated
in terms of demand restriction and restrictions on import capacity (seeAnn. IV.3,

pp. 2-4). The reduced availability of foreign exchange between 1982 and 1987.
due to United States military and paramilitary attacks and other wrongful acts
of the United States, means that production in al1 sectors of the economy was
afected, and not just those where destruction and imminent production losses
occur. In other words, the value which would have been added to the imported
raw materials foregone, was not realized. The sum of these annual values added
is theGDP loss.
347. The çalculations have been made on a yearly basis. The total amount of
GDP loss is US$1,582.7 million (see Ann. Vi.1, Table 1).
348. This estimate does not contemplate the direct losses from the disarticu-
lation caused by military mobilization and defence costs (see Chap. 4): nor the
other measures taken by the Government of the United States such as the cut in
sugar quota in 1983 or the financial harassment of Nicaragua by the United
States (seeAnn. IV.2).
349. Concerning the GDP loss? Nicaragua has used a method of evaluation
based on the ILPES rnacro-economic model which allows the effects of United
States aggression alone to be measured, independently both of exogenous
phenomena such as natural disasters or climatic conditions, and of endogenous

factors such as the econoinic policies of the Nicaraguan Government. The
difference between the ILPES model estimates of GDP loss due to the war are
congruent with the difference between the WorId Bank (1981) and the
Interamerican Development Bank (1983) estimates of likely future performance
and the actual performance in the context of the war.314 MIL~TARYAND PARAMILITAKYACTIVITIES

350. It is possible to calculate the losses in export income and GDP (proposed
as the basis of compensation by Nicaragua) due to United States military and
paramilitary attacks and the trade embargo, If these losses are added to the
actual record of exports and GDP during the 1982-1987period, the result is
what the Government of Nicaragua holds would have occurred had those illegal
actions not taken place. The forecasts of the IBRD (op. cit.) and the 1DB
((]p. ci/.) reproduced in Annex 1V.2might be taken as a reasonable expectation
of what would have happened to these variables in the relevant period under
"normal" circurnstances; but of course did not. due to the attacks. In fact, as
Annex IV.2 (Tables 8 and 9) indicates, the results are of a similar order of

magnitude.
351. For example, the mean of the lBRD "high" and "low" forecasts for
normal circumstances made in 1981 for GDP in 1986 is US2.59 thousand
million; a difference of US$440 million above the GDP figure of US$2.15
thousand million actually achieved for that year.The GDP losses due to damage
and production losses as well as the embargo for 1986are US$529.7 million. a
figure of a similar order of magnitude. Another example is the IDB export
forecast (made in 1983) of US$719 million for 1986; while the outturn was in
fact ~~$307 million, a difference of US$412 million. This figure is even greater
thnn the production and embargo losses of US$353.1 million claimed by the
Government of Nicaragua for 1986.
352. The two methods compared are diferent in nature. The main one, based
on the ILPES model. includes only the losses in economic development potential
from the material damages and the losses of production caused by the wrongful
acts of the United States. The second method, which consists of a subtraction
of the actual GDP from the projections made in 1981 by the World Bank is not
selective.It includes al1the causes of GDP losses. not only the wrongful acts of
the United States, but also the natural catastrophes of 1982 and 1985 and the
acts for which the United States has not been declared liable.

353. In the view of the Nicaraguan Government it is preferable to take into
account the results given by the first method because it is independent of
exogenous efects suc11as riaturaldisaster. Nevertheless,those deriving from the
second method may well be of interest to the Court as they indicate the
comparable order of magnitude.
354, Nicaragua thus presents two claims in respect of GDP losses:

(i) The GDF (i.e., value-added) lost as a çonsequence of the production
losses and müterial damage caused by United States military and paramili-
tary attacks between 1982 and 1987 ; which totals (see Ann. VI.1, Table 1)
US$i,582.7 million.
(ii) The GDP (i.e., value-added) lost as a consequence of the commercial losses
caused by the trade embargo between 1985 and 1987; which totals (see
Ann. VI, 1, Table 1) US$381.6 million. In combination, these two claims
represent a sum of US$1,964.3 million in lost economic development poten-
tial. When these losses are brought to their 1988 present value (see Ann.
VI.2) they are equivalent to : (i) US$2,058.3 million: and (ii) USS488.1 mil-
lion,respectively;for a total of US$2,546.4 million.

(ii)SociuI lo.s.si~.~

355. All United Nations bodies statethat development isnot a purely economic
matter but "a comprehensive economic, social. cultural and political process"(cf. A/RES/41/\28,4 December 1986,Dedaration on the Right to Development.
Preamble, para. 2).

"[Tlhe ultimate aim of development is the constant improvement of the
social situation ofentire populations" (A/RES/41/142, 4 December 1986,
lr~~plementatinnof ilte Declurutionon Snciul Progress und Developrnent; see
AJRESj2542 (XXIV), II December 1969).
356. There can be no doubt that the wrongful acts of the United States have
had, and still have, enormous detrimental eKects on the welfare and social
progress of the Nicaraguan people. The first priority of the new government

after the fall of the Somoza dictatorship was to increase the welfare of the
people. The 1980 plan for reactivating the economy puts the emphasis on
inçreasing the standard of living of the Nicaraguan people by meeting their basic
needs? such as proper nourishment, healthcare, education, mass transportation
and housing :
"A real possibility will be opened to al1 Nicaraguans of irnproving the
quality of theirlives, through the establishment of a policy which tends to
eradicate unemployment and makes effective the right to housing, health,

social security,efficient collective transport, education. culture, sport and
wholesorne entertainment". (Ministerio de Planification,Progrumu de
Rcaciii.ucion Economic en Beneficiodel Pueblo, Managua, 1979,p. 106.)
357. During the first three years of the Revolution, these objectives were given
high priority. Health and education accounted for 27 per cent of the budget for
1980.and 24 per cent in 1981,compared to 15per cent in 1987,and encouraging
results were obtained: a reduction to 13 per cent of the adult illiteracy rates
owing to a massive national literacy campaign in 1980,construction of about
200 newprimary schools in 1980-1981,and mass-vaccination and housing cam-

paigns, etc. (see World Bank!Nicarag~u:The Chcillenge (iR econstruction,Ann. X,
pp. 32-33).
358. Although the Nicaraguan Government has maintained this socialpriority,
the policy has been compromised by the wrongfiil acts of the United States. Not
only have the rise in levels of social welfare attained in several fields not been
rnaintained, but a certain regression has been registered. First, the destruction
and production lossescaused by the United States has reduced incomesgenerafly. .
Between 1983and 1987per cupifa GDP has declined by 19 per cent and civilian
government expenditure has fallen, which has inevitiibly affected nutrition and
health, particularly that of children. (See Ann..5.)Secondly, the trade embargo
denied spare parts and foreign exchange to social service facilities and reduced
their capacity to serve the population. This eflect has been aggravated because
theUnited States military and paramilitary activity has concentrated (seeChap.5,
Sec. A) its attacks on targets having especiafly strong social effects: destruction
of harvests or schools, murders of teachers or of doctors and nurses.
359. Annex lV.5 10 the Mernorial describes some of the social consequences
of the wrongful acts of the United States. The social data presented in the next
paragraphs are taken from official Nicaraguan Government statistics (see Insti-
tut~ Nacional de Estadistica y Censos, Anuario Estudislicn 1978 and Antiurio
Es~urli.sti1986).

360. Healtll: Since 1980,two hospitals have been built ;417 new primary care
posts have been created; the number of doctors has increased by 58 per cent,
the number of nurses by 211per cent; infant mortality had been rediiced frorn
120per thousand to 75 per thousand; and poliomyelitis has been eradicated; etc.
361. However, since 1983it has become increasinglydifficult to meet the needs316 MILITARYAND PARAMlLlTARYACTIViTIES

of the population. The total losses of healthcare units amount to US$2.8 million,
60 doctors and 22 nurses have been rnurdered, kidnapped or wounded. Mal-
nutrition has increased among the peasant population, especially children. The
incidence of measles has risen throughout the country and, in the war zones,

malaria has risen by 17per cent.
362. Education: Between 1979 and 1983,in addition to the literacy campaign
referred to above, the number of primary schools rose from 9,986 to 16,382and
enrolmentfrom 369,000to 565,000. Secondaryenrolnientrosefrom 98,874to 158,215.
363. During the period 1984-1987,67 schools were partially or totally dss-
troyed at a cost of US$1.2 million, and 60,240 primary school students and
30,120 participants in adult education have been affected by the closure of 620
schools and 840 adult education collectives in the war zones. One hundred
and ninety-eight teachers and 704 students have been murdered, kidnapped or
wounded and the teaching personnel has declined. The school attendance rate
has decreased while the illiteracy rate has risen again to over 24 per cent.
364. Social Security unri We&ire: Before 1979, social security coverage had

been limited to a small urban minority ;but by 1986over 358,000families, about
hakfthe total population, enjoyed this coverage which was expanded in the cities
and to the rural areas. Some 203 special attention centres had been established
to attend to homeless children, the mentally handicapped and old people. Special
schemes had been established to reintegrate discharg-d p-isoners, prostitutes,
etc., into society.
365. Between 1982and 1987, the wrongful acts of the United States have
damaged installations providing social services to the population to a cost of
more than US$600,000. Due to the war, one-quarter of a million persons (7 per
cent ofthe population) have been displaced ; 11.241children have been orphaned ;
thousands of families have been de~rived of income because of the death of
the head of the family; more than 4,000 persons handicapped by the war are

dependent for their survival on government assistance over the long-term. The
government has been obliged to allocate large amounts of rnoney to the care of
refugees and aiding the victims of the war. These financial expenses amount at
least to US$31,159,239 in the period 1982-1987.
366. Luhour: The workforce (Economically Active Population) of Nicaragua
is of the order of 1 million persons, of whom about one-half are occupied in
agriculturül pursuits. Those in permanent employment received considerabte
increases in social benefit and a betterment of working conditions after 1979;
while the self-employed gained access to land under the Agrarian Reform or
were organized in small industrial cooperatives.
367. The United States military and paramilitary activities have seriously
affected the labour situation in the country.Thousands ofyoung men and women
who would have formed part of the working population have been mobilized.

Starting in 1985, a relative lack of labour power has begun to be felt in the
forma1 sector of the economy. The situation is aggravated by the migration of
9,575 qualified professionals between 1979and 1986'frightened by the situation
created by the United States.
368. Housing: Before 1979'Nicaragua Fdceda dramatic situation in housing:
the rnajority of the population lived in unhealthy houses with no electricity or
running water. Between 1980and 1986some 7,000 houses a year have been built
by the governmeni, and many more families have benefited frorn "site and
service" schemes providing sanitation and electricity. By 1986,51 per cent of the
population had access to potable water and 45 percentto electric power; roughly
double the proportions ten years earlier.
369. Between 1980and 1987, niore than 2,300 houses have been destroyed atan estimated cost of US$13.2 million and tens of thousands of peasant families
have been compelted to abandon their homes. Due to the war effort, housing
construction cannot even keep up with popuIation growth.
370. Rorrcisand mas3 rrtrnsportation: Tmproving the means of transport is an
essential factor for raising the qualityof lifeand standard of living.One thousand,
two hundred and nineteen kilometers of new roads and 20 bridges were built
between 1980and 1986. ln the same time the contras have destroyed 32 bridges

(at a cost of USSI.5 million) and impeded the planned construction of hundreds
of kilometers of new roads.
371. The cost of the purely material damage described above - destruction
of healthcare tàcilities, of schools, of houses or of bridges- has already been.
included in the total cost ofmaterial damage (see Chap. 2). But, the social losses
arising from the loss of these facilities are infinitely more difficult to evaluate
with certainty.
372. In some cases a figure can be put on part of the cost of compensating
the population. Thus it is estimated that the Nicaraguan Government has
invested more than US$31 million in buying land, extending credit, building
houses, health and education facilities, providing food and other social services,
etc., for people displaced as a result of the war. But for most of these social
losses, estimation is very difficult, but it is of the same order of magnitude of
the closely related fossesof economic potential. Therefore, the Court is requested

to award Nicaragua a lump-sum of US$2,000 million as appropriate compen-
sation for the enormous social losses it has suffered due to the wrongful acts of
the United States.

Conclusion

373. As stated by the Court in its Judgment of 27 June 1986, "in a situation
of armed conflict (...)no reparation çan efface the results of conduct" contrary
to international law (I.C.J. Reports 1986,p. 144). It is important that even if the
reparation cannot "wipe out al1 the consequences of the illegal act" (1928,
P.C.I.J., SeriesA, No. 17, p. 47) it should meet this objective as far as possible.
And this is particularly true in a case of flagrant and persistent misconduct by
the wrongdoing State.
374. The sums presented in this chapter represent only a minimum.

375. The GDP losses have been calculated in accordance with an inter-
nationally recognized rnethod, on the basis of rigorous and objective data. Thus
the amount of reparation owed by the United States on account of loss of
development potential which their internationally wrongful acts have brought
about for Nicaragua represents a minimum net present value GDP loss of
US$2,546.4 million actualized to 1988.(See Ann. VI.2 for calculation.)
376. Similarly, as precise a description as possible has been given supruof the
social losses brought about by the internationally wrongful acts of the United
States. Given that these are of the same order of magnitude of the current GDP
losses, the sum of US$2,000million is claimed for the people of Nicaragua whose
development potential has been seriously affected by United States military and
paramilitary activities. CHAPTER7

REPARATION FOR THE VIOLATIONS OF THE SOVEREIGNTY OF
NICARAGUA

A. Introduction :the RelevantFindings

377. Two of the findings whiçh form part of the Dispositif of the Judgment
on the Merits in the present proceedings relate expressly to the breach of the
obligation under customary international law "not to violate the sovereignty of
another State", These arethe decisions in subparagraphs 5and 6 of the Dispositif
concerning overflights of Nicaraguan territory and the laying of mines in the
interna1 or territorial waters of Nicaragua during the first months of 1984. In
addition, subparagraph 5 inchdes violations of sovereignty caused "by the acts
imputable to the United States referred to in subparagraph (4) hereof".

378. lt is a truism that a Dispositif should be interpreted in the light of the
Judgment as a whole. and in the present connection the significance of the Dis-
positif islarified by the following passages from the Judgment :

"251. The efects of the principle of respect for territorial sovereignty
inevitably overlap with those of the principles of the prohibition of the use
of force and of non-intervention. Thus the assistance to the cotitrus.as well
as the direct attacks on Nicaraguan ports, oil installations, etc., referred to
in paragraphs 81 to 86 above, not only amount to an unlawful use of force,
but also constitute infringements of the territorial sovereignty of Nicaragua.
and incursions into its territorial andinterna1 waters. Similarly, the mining
operations in the Nicaraguan ports not only constitute breaches of the
principle of the non-use of force, but also affect Nicarag~la's sovereignty
oves certain maritime expanses. The Court has in fact found that these
operations were carried on in Nicaragua's territorial or interna1 waters or
both (paragraph 80). and accordingly they constitute a violation of
Nicaragua's sovereignty. The principle of respect for territorial sovereignty
is also directly infringed by the unauthorized overflight of a State's territory
by aircraft belonging to or under the control of the government of another
State. The Court has found above that sucli overflights were in fact made
(paragraph 91 above).
252. These violations cannot be justified either by collective self-defence,

for which, as the Court has recognized, tlie necessary circumstances are
lacking, nor by any right of the United States to take countermeasures
involving the use of force in the event of intervention by Nicaragua in El
Salvador, since no such right exists under the applicable international law.
They cannot be justified by the activities in El Salvador attributed to the
Government of Nicaragua. The latter activities, assuming that they did in
fact occur, do not bring into effect any right belonging tothe United States
which would justify the actions in question. Accordingly, such actions con-
stitute violations of Nicaragua's sovereignty under customary international
law." (1.C.J. Reports 1986, p. 128.)

379. ln the light of the passages quoted above, the content of the Dispositif, MEMORIAL (COMPENSATION) 319

and the submissions of the Applicant State both in the Mernorial and in the oral
hearings, the United States has been found responsible for four distinct types of
violation of the territorial sovereignty of Nicaragua.hilst there is some overlap,
in substance the violations generate four distinct forms of State responsibility
relating to distinct causesof action (or heads of liability) and distinct aspects of
the conduct of the United States.

B. TheModeof Reparation

380. In the case of what is sometimes called "moral injury" to the personality
of the State the appropriate mode of reparation is usually described in the
literature as "satisfaction". This may take one or more forms, including the
presentation of officialregrets and the punishment of the guilty officials: see, for
example, Rousseau, Droit internulional pzrblic, V, Paris, 1983, pages 218-219,
paragraphs 218-219; Nguyen Quoc Dinh, Daillier and Pellet, Droit internationul
public, Paris, 1987, page 710, paragraph 508. Moreover, it is often pointed out
that a mere judicial deçlaration of responsibility may play the role of "satis-
faction", as in the C'orfuC/~u:lrcrn(neelrits) case (LCJ. Reports IY49, p. 4 at
pp. 35, 36).

381. These elements will be familiar to the Court and the purpose of this
pleading is not to rehearse the standard materials but respectfully to offer an
important elucidation. On occasion the literature appears to exclude pecuniary
reparation from the list of available forms of satisfaction; cf. Jiménez de
Aréchaga in S~rensen (ed.), Manrlalof Public InternationalLaw, London, 1968,
page 572; Przetacznik, Revzrrg6nCrale(Jedroit intrr~icrticitiaplzrblic, Volume 78
(1974), pages 945-973.Such a position would surely be incompatible with sound
legal principle and ordinary comrnon sense. No doubt the forms of satisfaction
normully ripplicrible in negotiated bilateral settlernents in respect of "moral
damage" do not involve pecuniary reparation. But there are good reasons for
this when the wrong is of a highly symbolic character (for example, an insult to
the flag) and the reparation itself is appropriately symbolic.
382. The present case, however, is significantly different. The process of repa-
ration is taking place within the framework of an adjudication, and the wrongs
complained of fall within well-known causes of action which were specifically
pleaded by the Applicant State and were the subjects of specificfindings by the
Court. As wrongs, they generate liability without proof of specialdamage, but as

a matter of remedies they are eminently suitable for reparation by means of an
appropriate pecuniary award.
383. The possibility of awarding pecuniary satisfaction for violations of sover-
eignty is not restricted in any way as a consequence of the decision of the Court
in the Corfil Channel(Merits) case. In that case the Court, having held that the
action of the British Navy known as "Operation Retail" constituted a violation
of Albanian sovereignty, stated that: "This declaration is in accordance with the
request made by Albania through her Counsel, and is in itself appropriate
satisfitction.(1C.J. Reports 1949,p. 35 ;and see also ibid.,pp. 25-26.)The Court
does not address itself to the question whether pecuniary reparation would be
available in principle. However,the precisebasis of decision isthe fact that Albania
had not clairned any surn of money, as the text of the Judgment makes clear:

"The Albanian Government has not disputed the competence of the Court
to decide what kind of .sati.$uctioris due under this part of the Agreement.
The case was argued on behalf of both Parties on the basis that this question320 MIL~TARY AND PARAMILITARYACTIV~TIES

should be decided by the Court. In the written pleadings, the Albanian
Government contended that it was entitled to apologies. During the oral
proceedings, Counselfor Albania discussedthe question whether a pecuniary
satisfaction wasdue. As no diimagewascaused, he did not claim any sum of
money. He concluded [translation]:'What we desire is the declaration of the
Court from a legalpoint of view ...'."(LC.J. Reports 1949, pp. 25-26.)

384. A further consideration is the extrerne improbability of the viewthat the
law recognizes the award of moral damages exclusively as accessory to other
damages (as in the I'niAlone case, Reports ofInrernntionulArbitral Awards,III,
p. 1609,at p.16181,but does not accept the award of pecuniary reparation as
theprincipulforrnof compensation for seriousbreaches of fundamental principles
of custornary international law. Indeed, most of the doctrinal opinion assumes
that the forrnsof satisfaction includethe payment of money :seeJohnson, Britisli
YearBookof InternationalLaw, Volume 29(19521,page493 ;O'Connell,Interna-
tionalLaw, 2nd edition, London, 1970,pages 1114-1117; Rousseau, Droit inter-

riationalpublic, V, Paris, 1983, pages 219-220, paragraph 219; Guggenheim,
Traitéde droit internationulpublic,11,Genève,1954,page 75 ;Brownlie,Principles
of Public InternationalLaru,3rd edition, 1979,page 461.
385. The ruling of the Secretary-General of the United Nations in the Ruinbow
WarriorAffaair(Neiv Zealand v. Frunce) provides substantial support for the
view that pecuniary compensatiori is an appropriate remedy for gross violation
of the territorial sovereignty of a State: for the text see E. Lauterpacht, Q.C.
(ed.), InternationalLarv Reports, Volume 74, page 256 (Ruling dated 6 July
1986). The circumstancesare wellknown and al1the essentialfacts wereadmitted
by the French Government. Both Parties agreed to ask the Secretary-General
for a rulingon their differences.n its Memorandum New Zealand claimed "com-
pensation for the violation of sovereignty and the affront and insult that that
involved" (ibid.,p. 259). This claim was separate from a claim in respect of cost
resulting from France's unlawfulacts. In response to the claimsfor compensation
the Ruling of the Secretary-Generalawarded New Zealand US$7million"as corn-
pensation for al1 the damage it has suffered" (ibid p. ,71), and it is obvious
that this finding was not confined to one particular aspect of the claim for com-
pensation.

386. Thus the submission of the Government of Nicaragua is that the
appropriate mode of reparation should be the grant of pecuniary satisfaction
and that this submissionisfullyin accordancewith the standards of contemporary
international law and practice.

C, The Claimfor the FourFormsof Violationof the Sovereigntyof Nicaragua

387. The Judgment of the Court on the Merits has identified four distinct
forms of violation of the sovereignty of Nicaragua: the conduct constituting
breach of the obligation not to intervene in the affatrs of another State (see the

Judgment, para. 251), the conduct in breach of the obligation not to use force
against another State (Dispositif, subpara.5referring to subpara. 4), the directing
or authorizing of overflights of Nicaraguan territory (Dispositif, subpara. 51,
and the laying of mines in the interna1or territorial waters of Nicaragua during
the first months of 1984(Dispositif, subpara. 6).
388. These findingsidentify and are based upon four distinct causes of action.
The literüture of the law recognizes the significance of the separate causes of
action inthe contex tof State responsjbility:seeJennings, 121 Rectleil des coiirs, (1967-II), pages 507-509; Jennings also in Cassese (ed.), The Current Legul
Regutalionof the UseofForce, 1986,page 326; Brownlie, Systern of the Law of
Nations: State Responsibility, Part 1, Oxford, 1983,pages 53-85.This approach
reflects the practice of States inormulating Applications before the Court and
the related submissions. Thus in the Nuclear Tests cases Australia claimed that
three separate categories of rights had been violated by France's conduct of

nuclear atmospheric tests in the South Pacificregion (and that these rights were
subject tolegalvindication independentlyof material damage) :see 1.C.J. Reports
1974, pages 360-362,paragraphs 101-102(joint dissenting opinion).
389. Moreover, in this same connection the Court is respectfully reminded
that, in ajoint dissentingopinion, Judges Onyeama, Dillard, JiménezdeAréchaga
and Sir Humphrey Waldock recognized (at least on a prima faciebasis and
for purposes of admissibility) that each separate claim engaged a distinct issue
involving the question of "legal interest" and the content of a particular rule of
custornary international law : see 1 C.J. Reprirts 1974, pages 363-371,
paragraphs 105-118.A similar position was taken by the same Judges in the case
ofNew Zealclndv. France,I. C.J. Reports 1974,pages 519-522,paragraphs 48-54.
390. In the submission ofthe Government of Nicaragua, the liability of the
Respondent State is generated independently by each of the four causes of action
concerning the violation of its sovereignty. Each cause of action relates to a

substantially distinct type of misconduct and the liability is therefore cumulative.
On this legal basis, Nicaragua claims symbolic pecuniarycompensation for each
of the four distinct forms of violation of its sovereignty.This clairn ispresented
without prejudice to the claims contained in the present Memorial relating to
loss of life,personal injuries, destruction of and damage to property and other
losses caused to the economy of Nicaragua, resulting from the violations of
customary international law and frorn breaches of the obligations under the
Treaty of Friendship, Commerce and Navigation signed on 21 January 1956.
The claim respecting violation of Nicaragua's sovereignty is equally without
prejudice to the general claim for compensation concerning moral damage,
which claim is accessoryto the claims for material damage (see Chap. 8 below).
391. in the submission of the Government of Nicaragua the quantum of the
pecuniary satisfaction should be the product of the most logical standard of
justice available, that is to say, the actual or approxirnate expenditure by the
United States entailed by the actual operations which ineach of the four cases

of violation respectivelycontribute to the violation, or pattern of violations, of
Nicaraguan sovereignty.This standard has the severalattractions that it involves
a neat measure of violation of sovereignty, that it is just that the quantum of
wrongdoing be related to the effort expended by the wrongdoer conveniently
expressed in money terms, and that the type of operation is not necessarilythe
same in each case and any actual difference will be reflected inthe relevant
expenditure.
392. This standard of justice can be applied to the four forms of violation of
sovereignty as follows. In the case of the violations resulting from breaches of
the principleof non-intervention the expenditure entailedby the actual operations
which constituted the breaches depended upon the appropriations made in
accordance with the plans and policies of the United States Government. In the
material period these appropriations total $222.7' million (see Ann. VIII, p. 3,

'This figuredoesnot includean additionalUS$36.7 million raisefromprivatesources
and othercountrieswith United States NationalSecurity Counciilntennediationor the
fundsincluded inthis arnount,product of arms salesto Iran.(See Ann. VIII,p. 3,and
Ann. X, pp.45-46.)322 MILITARYANI) PARAMILITARY ACTlVlTlES

and Ann. X?pp. 45-46) and therefore this sum is the product of the most logical
standard of justice in respect of this type of violation of sovereignty.
393. The second category of violations of sovereignty consists of the seven
episodes involving direct action of United States personnel: see the Judgment
on the Merits, I.C.J. Reports 1986, pages 48-51, paragraphs 81-86. The seven
episodes in respectof which the United States has been held liable are as follows:

"(i) 13 September 1983: ail underwater oil pipeline and part of the oil
terminal at Puerto Sandino were blowii up;
(ii) 10 October 1983: an attack was made by air and sea on the port of
Corinto, involving the destruction of fiveoil storage tanks, the loss of
millions of gallons of fiiel, and the evacuation of large numbers of the
local population ;
(iii) 14 October 1983: the iinderwater oil pipeline at Puerto Sandino was
again blown up;
(iv)4/5 January 1984: an attack was made by speedboats and helicopters
using rockets against the Potosi Naval Base;

(v) 7 March 1984: an attack was made on the oil and storage facility at
San Juan del Sur by speedboats and helicopters;
(vi)28/30 March 1984: clashes occurred at Puerto Sandino between
speedboats, in the course of minelaying operations, and Nicaraguan
patrol boats; intervention by a helicopter in support of the speedboats;
(vii)9April 1984: a helicopter launched from a mother ship in international
waters provided fire support for an ARDE attack on San Juan del
Norte."

394. The Judgment on the Merits contains the following description of the
modus operundiaccording to which these specificattacks were conducted:
"The general pattern followed by these attacks appears to the Court, on
the basis of that evidence and of press reports quoting United States
administration sources, to have been as follows.A 'mother ship'was supplied

(apparently leased) by the CIA; whether it was of United States registry
does not appear. Speedboats, guns and ammunition were supplied by the
United States administration, and the actual attacks were carried out by
'UCLAs'. Helicopters piloted by Nicaraguans and others piloted by United
States nationals were also involved on some occasions. Acçording to one
report the pilots were United States civilians under contract to the CIA.
Although it is not proved that any United States military personnel took a
direct part in the operations, agentsof the United States participated in the
planning, direction, support and execution of the operations. The execution
was the task rather of the 'UCLAs', while United States nationals partici-
pated in the planning, direction and support. The imputability to the United
States of these attacks appears therefore to the Court to be established."
(I.CJ. Reports 1986, pp. 50-51, para. 86.)

395. As the Court will understand, it is not possible to produce evidence of
the actual cost of these operations, but a reasonable estimate based upon this
description of the modus operandiwould be US$IOmillion. This figure represents
the following assumptions :

(a) The cost of seven individual operations at US$250,000each.
(b) The cost of the logistical background and lead time operations which would
be the necessary incidents of these attacks, which cost is estirnated at
US$8.25 million. 396. The third category of violations of sovereignty was the laying of mines
over a period of rnonths: see the Judgment on the Merits. I.C.J. Reports IYK6,
pages 46-48, paragraphs 76-80. The process of estimation in this instance must
be a rnatter of impression and a reasonable figure would be US$5 million.

397. The fourth and last category of violations of sovereignty is by no means
the least significant. The type of activity which the infringement of airspace
involves in the present case goes far beyond a technical infringement of sover-
eignty. The purposes of the flights (Judgment on the Merits, I.CJ. Rep.prirts
1986, pp. 51-53; paras. 87-91) were partly for logistical support ', partly for
reconnaissance and partly for intimidation, for example, by means of sonic
booms. Such operations thus form an integral part of the orchestra consisting
of different instruments of coercion and aggression and their attendant parapher-
rialiaA pattern of such operationsconstitutes a gross violation ofthe sovereignty
cifNicaragua.
398. In the nature of things the costs of aerial reconnaissance of the sophisti-
cated type employed against Nicarügua are very considerable. Nicaragua esti-
mates that at least 10 per cent of the total çost of United States military and

paramilitsiryüctivitiesconsists of intelligenceinformation gathered through aerial
reconnaissance of Nicaraguan territory. That thus amounts to an average of
IJS$138.5million per year for a total of US$831 million in the period 1982-1987.
399. In conclusion, the Government of Nicaragua wishes to emphasize the
circ~imstanceswhich point to the particular propriety of pecuniary reparation
for the violations of sovereignty perpetrated by the United States and its agents.
These violations have formed a set of persistent courses or patterns of conduct :
they do not represent merely technifal violations of the sovereignty ofNicaragua.
Moreover, the United States has on numerous occasions expressed its intention
to intervene in the affairs of Nicaragua for various purposes of national policy,
none of which has been recognized by the Court as a justificittion for the conduct
concerned. Pecuniary satisfaction would reflectthe significantlegal interest which
Nicaragua has in freedom from intervention, freedom from armed attaçks,

freedom from aerial trespass and freedom from the mining of her hiirbours and
sea lanes, al1of which represent legal interests of the type insisted upon by the
Governrnents of Australia and New Zealand in their pleadings in the Nirckeur
Tc.stscases.

'Thc United StziteCongressional Committees investigati he Iran-Contra Affair(H.
232March-60October1986alone. No(SccAnn.X,.AttachmentlogA,tpp.79-81r.)igtsntheperiod
Nicaragua has documented1,796reconnaissanceflights inthe period 1981-1988 (see
Ann. VIII,p. 18). CWAPTER 8

MORALDAMAGE:THE CENERAL CLAIMFOR ACCESSORY
COMPENSATION

A. Inîroduction

400. In the previous chapter of the Memorial the Government of Nicaragua
presented itsclaims in respect of violations of sovereignty in terms of a request
for pecuniary satisfaction as the principal form of reparation forose violations
of obligations arising fromcustomary international Law.However, in the çircum-
stances of the present case, and given the nature of the wrongful acts for which
the United States has been held lirible, the Government of Nicaragua requests
the Court to assess an appropriate sum as additional amends, that is to say, as
compensation accessory to the compensation for loss of life, personal injuries,
material damage and loss to the economy of Nicaragua, resulting from the acti-
vities of the United States and its agents.

B. Accessory Compensationfor Moral Damage: the Principle

401. The principle that compensation may be awarded as a form of reparation
for moral damüge is recognized by authoritative opinion : see Rousseau, Drnii
in~ernationalpztblic, V, Paris, 1983, pages 226-227, paragraph 225; Verzijl,
InternatiunulLuw in HistoriculPurspcctive.VI, Leiden, 1973,pages 761-762; and
Reitzer, La re'parufioiicornnrecnnsi.rluencde l'acteillicicn ~lroitiritrrpratiotral,
Paris, 1938,pages 210-212.
402. The principle has also been recognized in several major episodes of dis-
pute settlement. Thus in the I'm Alone case the Canadian Government com-
plained of the sinking on the high seas of a liquor-smuggling vessel of Cana-
dian registration by a United Statescoastguard vesselasa climax to a hot pursuit
which commenced outside United States territorial waters but within the inspection
zone provided for in the "Liqunr Treaty" between Great Britain and the United
States. The Canadian claim was referred to Commissioners appointed under the
Convention concerned, and in their final report the following appears:

"We find as a fact that, from September, 1928,down to the date when
she was sunk, the I'm Alonc, although a British ship of Canadian registry,
was defacto owned, controlled, and at the critical times, managed, and her
movements directed and her cargo dealt with and disposed of, by a group
of persons acting in concert who were entirely, or nearly so, citizens of the
United States, and who employed her for the purposes mentioned ... The
Commissioners consider that, in view of the facts, no compensation ought
to be paid in respect of the loss of the ship or the cargo.
The act of sinking the ship, however, by officers of the United States
Coast Guard, was, as we have already indicated, an unlawfui act; and the

Commissioners consider that the United States ought formally to acknow-
ledge the illegality, and to apologize to His Majesty's Canadian Government
therefor; andl further,that as a material amend in respect of the wrong the United States should pay the sum of $25,000 to His Majesty's Canadian
Government ;and they recommend accordingly." (Repnris c$ In~ernaiionul
ArbilralAivarris.III,p. 1609at pp. 1617-1618.)

C. Acceptance of the Principle of Compensation for Moral Damage by the
United States Government

403. It cornes as no surprise that the element of compensation for "moral
damage" is recognized in the practice of States, and, in particular, in the two
United States Department of State compilations of practice: see Hackworth,
Digesf of International Law, II,U.S.G.P.O., Washington, 1941 (Department of
State Publication 1521), pages 703-708; and Whiteman, Digest qf Intrerncrtionul
Lurv, Volume 8, U.S.G.P.O. (released December 1967) (Department of State

E'ublication 8290), pages 1212-1214. which incorporate the decision of the
Commissioners in the I'm Alonr case. ln addition it is to be recalled that
Whiteman? Darirages inInterriutionaLluw, Volume II, U.S.G.P.O., Washington,
1937, pages 1372-1376,incorporates the text of the report of the Commission
appointed by the Council of the League of Nations to carry out an investigation
of the Greek-Bulgarian frontier incident of 1925,The Report, dated 28 November
1925, makes recommendations regarding reparation to be made, inier uliu, for
"morat damage".
404. Again in the Aeriul Iriciclenfcase the United States claim against Bulgaria,
as carefully formulated in its Memorial (pp. 246-248). included a clairn for the
illegality and wanton breach of international standards. The Memorial relies,
inter dia,upon the Final Report of the Cornmissioners in the lin Alone case.
The key passages in the United States Memorial are as follows (at p. 246):

"2. On the subject of additional amends, of which the United States
gave notice in its Application,paragraph 3, the United States Government
respectfully submits that the Court should grant an additional judgment to
the United States Government for $100,000 for the additional wrongs
wantonly committed by the Bulgarian Government ;that is, other than those
committed against the next of kin whose monetary claims for compensatory

damages have been espoused by the United States. For if we were to fol-
low only the compensatory theory of civil damages in general, we might
conceivably reach a point where no damages would be payable though
treacherous murders were committed internationalky by one government on
the nationals of another government. Additional amends to the injured
government are therefore desirable and even necessary.
Internationallaw authorities have recognized the existençeof this problem
(see, for example, the reservation to judgment of Judge Parker in the
Lrrsitanicicase which is cited by the Memorial of the Government of tsrael
in the parallel case, paragraph 104, page 108,last sentence).
On the issue of damages the applicable case is, therefore, the lm Alone
case, which is discussed in Volume 1,Whiteman's Damages iinIniernaiinal
LLIII('1937), pages 151-157,717. In that case the commission, consisting of
Mr. Justice Van Devanter of the United States Supreme Court and Duff,
Canadian Commissioner, ruled thatthe United Statesshould pay. inaddition

to individual sums for the sinking of a rum-runner of Canadian registry as
compensation to the members of the crew who were not parties to the illegal
conspiracy to smuggle liqiior into the United States, a sum of $25,000 to326 MILITARY AND PARAMILITARYACTIVITIES

the Canadian Government in addition to apologizing to that Government
for the intentionalsinking of the suspected vessel,The commission said that :

'.. the sinking could not bejustified by any principle of international law
... The act of sinking the ship ... by officers of the United States Coast
Guard. was ... an unlawful act';
and the commissioners considered that the United States ought :

'.. formally to acknowledge its illegülityand to apologize to His Majesty's
Canadian Government therefor; and, further, that as a material amend
in respect of the wrong the United States should pay the sum of $25,000
to His Majesty's Canadian Government; and they recommend accord-
ingly.'(Whiteinan, page 157.)

It is noted that in the Inzhriecase against Persia, the United States took
a similür view (seeWhiteman, Volume 1,page 732).
Courts have long recognized that there are situations in which no showing
of monetary loss need be made to justify a monetary award. The relevance
of the domestic Anglo-American law on defamation is an example. As is
well known, injury to reputation does not need to be proved to the penny
and juries and courts are permitted to award substantial damages without
a showing of actual injury. The damage inRicted on the United States and
the American people is obviously greater than the damage to an individual.
The case presented in ihis Memorial is not siniply a civil problem of

claims of American nationals. The whole problem of the freedom of the air
and the safety of the nationals of al1governments from murderous attack
by the government of overflown terrain is involved. The problem presented
transcends the individuiil 4X-AKC.
The principle that a government is liable for its torts. both for those
committed against the nationals of other governments and those against
other governments themselves, is clear..." (1.C.J. Pleading-7,AeriulIncillent.
pp. 246-247.)

405. In the Aeriul Incident case the United States Memorial concluded with a
special claim of $200,000 to cover the delictual elements, in addition to the
awards of "monetary darnages for the account of the next of kin of the American
passengers". (Ihirl.,p. 248.)
406. These materials dernoristrate beyond üny reasonable doubt that the
United States Government hiis accepted the princjple that compensation is an
appropriate form of reparation in cases of so-called "moral damage" to the
claimant State. Moreover, the principle is recognized as being applicable precisely
in the situation in which the moral damage forms an aspect of conduct involving
material harm and consequently the compens:ition for moral damage is in a
sense accessory to the claim for deatlis, personal injuries and material losses.

D. The Connection between the Findings on the Merits, Obligations Erxa
Omnes, and Norms of JUSCopns

407. The propriety of reparation for moral damage in the present proceedings
is confirmed by the particular charücter of the legal norms involved in the

principal findings of the Court on the Merits. The findings in subparagraphs 3
and 4 of the Dispositif of the Judgment on the Merits relate directly to obligations
erga onines, This type of obligation was profiled in a passage in the Judgment
of the Court in the ~arcekono Tractioncase thus: "33. When a State admits into its territory foreign investments or foreign
nationals, whether naturril or juristic persons, it is bound to extend to them
the protection of the law and assumes obligations concerning the treatment
to be afforded them. These obligations, however, are neither absolute nor
unqualified. In particular, an essential distinction should be drawn between
the obligations of a State towards the international community as a whole,
and those arising vis-à-visanother State in the fieldof diplomatic protection.
By their very nature the former are the concern of al1States. In viewof the

importance of the rights involved, al1 States cal1 be held io have a legal
interest in their protection ;they are obligations ergu omnes.
34. Such obligations derive. for example, in contemporary international
law, from the outlawing of acts of aggression, and of genocide, as also from
the principles and rules concerning the basic rights of the human person,
including protection from slavery and racial discrimination. Some of the
corresponding rights of protection have entered into the body of general
international law (Reservations to tlie Convention on the Prevention und
Punisliment ofthe Crime of Grnocide, Advisory Opinion, I.C. J. Reports 1951.
p. 23); others are conferred by international instruments of a universal or
quasi-universal character." (1,C.J. Reports 1970, p. 32.)

The Court is respectfully reminded that the majority Judgment in the Burcelonu
Trurtion case had the support of 12Judges.
408. The concept of obligations valid ergu cimnes has broad support from
authoritative opinion: sec? for example, Mosler, The InierncrtinnrilSociety us u
LeguECornniuni~y,Alphen aan den Rijn, 1980,pages 19-20, 134-136. The concept
is for most practical purposes identical to that of jus cogens, a concept which
has received widespread recognition from authoritative opinion. The evidence of
such general acceptance is by no means confined to the well-known provisions

in Articles 53, 64 and 71 of the Vienna Convention on the Law of Treaties
concluded in 1969.As long ago as 1957 Sir Gerald Fitzmaurice, in his lectures
at the Hague Academy, referred to :
"... certain forms of illegal action that can never be justified by or put

beyond the range of legitimate complaint by the prior illegal action of
another State, even when intended as a reply to such action. These are acts
which are not merely illegal, but malum inse, such as certain violations of
human rights, certain breaches of the laws of war. and other rules in the
nature of jiw cogens - that is to Say obligations of an absolute character,
compliance with which is not dependent on corresponding compliance by
others, but is requisite in al1circumstançes, unless under stress of literal vis
mu~or."(92 Rrrueil dc>.csoiirs (1957-11 ),p. 120; and see also atpp. 122, 125.)

409. The extensive acceptance given to the concept of,jiw rogens by the most
highly qualified publicists of the various nations is amply evidenced by the
following sources : Fitzmaurice, Briiisli Yeur Bocik of International Law,
Volume 59 (1959), pages 224-225 (iilso published in Fitzmaurice, Tl16LUWund
Procedure oftlie I~ziernationulCourt cg Justirr, Cambridge. 1986,pp. 626-627) ;
McNair, The Laiv of Trmtic~, Oxford. 1961. pages 213-215; Waldock (Special
Rapporteur of the International Law Commission), Second Report on the Law
of Treaties, Yeurhonk iif tlie Ititernaiionul Lu~vCommission, 1963,II, pages 52-53.
paragraphs 1-6; Quadri, 113 R~cueil des coiirs ( 1964-III), pages 335-338 ;
Jennings, CunzhriclgeEsvuys in International Law, London, 1965, pages 73-74;
Verdross. Ameriçccn Jowrnrilofïnferrrutionri l~itz.,olume 64( )1966), pages 55-63;

hlorelli. Rivista di diritto itrternuzionalr,Volume 51(1968), pages 108-117 ;Judge328 MILITARY AN13 PARAMILITARY ACTIVITIES

Ammoun, separate opinion in the Burcelona Tractioncase, I.C.J. Reporls 1970,
page 304; Ago, 134 Recueil clescours ( 1971-111 ), page 324 (note 37) ; Tunkin,
Theory of Internatinnul Luw, London, 1974, pages 147-160 ; Ago (Special
Rapporteur of the International Law Commission), Yearbookof the Internuticinul
Luw Commissiiin, 1976, II (Part One), pages 31-32, paragraphs 98-99; Jiménez
de Aréchaga, 159 Recueildes cours,Volume 159 (1978-1), pages 62-68; Podesta
Costa and Ruda, Derecho Itiltert~ucioriaPlublico. 5th edition, 1979,1. page 30;
Nguyen Quoc Dinh, Daillier and Pellet, Droit international public,Paris. 1987,
pages 107?185-191 ; and the Counter-Memorial submitted by the United States

in the Jurisdiction phaseof the present case. dated 17August 1984,11,pages 94-95,
paragraph 314.
410. In brief, the concept of ergu omnes obligations and its close relation jus
cogensstand for the ordrepublic of the international community, and the award
of reparation for moral dümage would give substance to this ordrepublic and
thus faIlwell within the bounds of the judicial function and considerations of
judicial propriety.
411. For there can be no doubt, in the submission of the Government of
Nicaragua, that the preponderance of the activiries for which the United States
has been held ro beür responsibility fall within the category of norms of jus
cogens.The subject-matter ofjus cogens was summarized by Judge Ago in his
lectures ritthe Hague Academy in 1971thus :

"If one examines carefully the opinions expressed in the lnternational
Law Commission and, more generally, in the writings ofjurists, one becomes
üware that a certain unity of views exists with regard to the determination
of the rules which the consciousness of the world regards today as rules of
jus copns. These include the fundamental rules concerning the safeguarding
of peaçe, in particular those which prohibit any reçourse to the use or threat

of force, fundamental rules of a humanitarian nature (prohibition of
genocide, slavery and racial discrimination, protection of essential rights of
the human person in time of peace and of war), the rules prohibiting any
infringement of the independence and sovereign equality of States, the
ruies which ensure to al1the members of the international community the
enjoyment of certain cornmon resources (the high seas, outer space, etc.)."
(134 Recueil des cours (1971-IiI). p. 324, note 37; reproduced in English
translation, Yearbook of the International Luw Commission, 1976, 11 (Part
One), p. 32, note 148.)

412, The law of theCharter of the Unitcd Nations concerning the use of force
isalways recognized as forming part of jzrs ivgens: see President Waldock,
Yearbook (.fthe InternationcilLuiil Conimissiun. 1963, Il, page 52, paragraph 1 ;
President Jiménez de Aréchaga. 159 Recueil dcs cours (1978-1), page 64.
Moreover, Judge Ago's Formulation (quoted in the previous paragraph) includes
not only the "fundamental rules" relating to the use or threat of force but also
"the rules prohibiting any infringeinent of the independence and sovereign
equality of States", and this expression may be reasonably understood to extend
to violations ofthe obligation under customary international law not to intervene
in theaffiairsof another State, whether or not such violations involve the use or

threat of force.
413. In any case, in a context which prefigured the appearance of jus cngens
as such, the Court has characterized resort to forcible intervention in the
following terms :
"The Court can only regard the alleged right of intervention as the manifestation of a policy of force, such as has, in the past, given rise to
most serious abuses and such as cannot, whatever be the present defects in
international organization, find a place in international law." (Corfi Cfiunnel
(Merits), I.C.J. Reports 1949, p. 35.)

E. TheParticular Elements of Affront to International Public Order

414. The elements of moral damage will naturally Varyconsiderably from case

to case according to the circumstances and the identification of the elements
relevant to a particular case must be a matter of appreciation. However, the
process of weighingup theelements ofmoral damage isby no means unstructured,
and must reflect the relevant precedents and known çriteria of contemporary
international public policy.

(i) The Cnnnectionbetiveen the Activities of the United Sfures and Norrns qfJus
Cogens

4 L5. The Government of Nicaragua has already emphasized that the prepon-
derance of the activities for which the United States has been held to bear
responsibilityfall within the category of norms ofjus cogens.

(ii) The OverailIntention and Policy of the United Slates Governrnent

416. The particular nature of the overall intention and policy of the United
States Government is of the greatest relevance for present purposes. The real
nature of that policy was represented in the evidence set forth in the Memorial
of Nicaragua in the Merits phase of these proceedings. As a consequence of the
Iran-Contra hearings, the full nature and extent of the United States policy aims

;ind cynical indifïerence to the standards of international law and morality are
now matters ofpublic knowledge (see Ann. X, Attachments A-D). The circum-
stances of United States armed aggression and its persistent campaign of inter-
vention are such that there isatotal absence of any data which might be relevant
to either justification or mitigaation. In short, the policies and the modes of
implementation adopted were not only illegasilhmodo but were also illegal ab
inilio andipsofucrn.

(iii) The Srriousness of the Bruches

417. On a previous occasion the Court found it necessary to emphasize "the
extent and seriousness of the conflict between the conduct of [the Respondent
State] and its obligations ...": see the Judgment in the case concerning United
Stutes Diplnmufic Co~uulurSrrift in Tehran, 1.C.J. Reports 1980, page 42, para-
graph 91. In the same context the Court found itself "obliged to stress the
'cumulritive efect' of the Respondent State's breaches when taken together"
('ibict.).These characterizations apply with no less justice to the conduct of the
United States as described in the body of the Judgment on the Merits and as
reflected in the impressive succession of findings in the Dispositif.

(iv) Cynicul Disregtirciof the Obligationsof !lie Treuty of Friendship. Commerce
und Nuvigalion of1956

418, In subparagraphs 10 and Il of the Dispositif of the Judgment on the330 MILITARY AND PARAMILITARY ACTIVITIES

Merits the Court deals in its findiiigs with specifiçconduct of the United States
involving breaches of the Treaty of Friendship, Commerce and Navigation
between the Parties signed at Managua on 21 January 1956,and calculated to
deprive that instrument of its object and purpose. The issuesof reparation arising
from the general embargo on trade and other specific acts of the Respondent
State have been examined elsewhere in the Memorial (see Chaps. 3 and 5).

However, in the opinion of the Government of Nicaragua, the deliberate and
totally unjustified breliches of a treaty of friendship provide an independent
basis for a claim for pecuniary satisfaction by way of reparation for a form of
moral damage.
419. The calculated disregard of the provisions of a Treaty of Friendship.
Commerce and Navigation, involving the laying of mines in the approaches to
Nicaraguan ports ispur .e..ccell~nca type of moral damas. As the Court
indicates in its Judgment on the Merits (I.C.J. Reports 1586. p. 138,
paras. 775-276)the breaches of the Treaty involved direct attacks on ports and
other targets, the mining of Nicarüguan ports and acts of economiç presure. The
view of the Court is clearly expressed: the conduct of the Respondent State was
in this respect"flagrantly in çontr;idiction with the purpose of the Treaty" (ibid.,
para. 276).

(v) IntimidationLISun Instr~m~ei~oft Nutionul Policy

420. The most striking feature of this case is the persistent policy of the
Government of the United States to coerce the Government of Nicaragua into
an acceptance of its political demands. The present proceedings are focused
primarily upon intervention and the use of force as instruments of national
policy. In its Judgment on the merits the Court has taken care to emphasize that
no "general right of intervention, in support of an opposition within another
State, exists in contemporary international law": see I.C.J. Rsparrs 1986,
pages 108-109,paragraphs 206-209;and, in particular, page 109,paragraph 209.
Moreover, the Court has pointed out that the United States has not claimed that
its interventionis justified on the legalplane: see ibid.. paragraphs 207-208.
421. Thus the policyaim of the United States(the coercion of the Government
of Nicaragua as an instrument ofnational policy),the attitude ofthe Government
of the United States (a cynical indifferenceto the absericeof a legaljustification),
and its actual conduct (the extensive and persistent use of coercion both by

means of armed force and by means of economiç pressure), involve breaches
of the rules prohibiting the "infringernent of the independence and sovereign
equality of States", which rules have been described by Judge Ago as rules of
jus cugens: see 134 Recueil des cours (1971-III), page 324, note 37; and (in
English transiation) Yeurhook if tlie Inrernationul Luit?Commission, 1976, 11
(Part One), page 32, note 148.

(vi) The CulIousIndifference la Eletnentcirycons ide rut ionf.Humuniy

422. In a number of respects the activities of the United States reflected,and
continue to reflect, a callous indilyerenceto the "elementary considerations of
humanity" referred to by the Court in its Judgment in the Coi-f'uCliunrielcase
(Merits), I.C.J. Reports 1945, page 22. Ithas heen the standard tactic of the
contra forces to kill civiliansand to use deliberate tactics of terror. Consequently
the quality of the intervention for which the United States has been held
responsibleis the moral equivalent to the conduct described by the United States

Memorial in the Arriul Inciderrlcase, as follow: "The case is one which, if committed by individuals, would submit them
to charges of murder and in many countries to capital punishment and
certainly to maximum penalties." (I.C.J. Pleuriings, Aerial Incident case,
p. 246.)

423. This callousness in choice of rnethods by responsible officials of the
United States is highlighted by the production and dissemination of the manual
entitled Operacivnessicologicas erzguerrude guerrillas in 1983.The Judgrnent on
the Merits (pp. 65-69, paras. 116-122) provides a succinct description of the
contents and purposes of this remarkable work. As the Court has occasion
to observe

"the question whether the United States was, or rnust have been, aware at
the relevant time that allegations of breaches of humanitarilin law were
being made against the cuntrusis relevant to an assessment of the lawfulness
of the action of the United States" (ihid., para. 116).
In a later section of the Judgrnent the Court examined the legal implications of
the publication and dissemination of the manual and reached the following
conclusions :

"255. The Court has also found (paragraphs 219 and 220 above) that
general principles of humaniiarian law include a particular prohibition,
accepted by States, and extending to activities which occur in the context of'
armed confficts!whether international in character or not. By virtue of such
general principles, the United States is bound to refrain from encouragement
of persons or groups engaged in the conflict in Nicaragua to commit
violations of Article3 which is common to al1four Geneva Conventions of
12August 1949.The question here does not of course relate to the definition
of the circumstances in which one State may be regarded as responsible for
acts carried out by another State, which probably do not include the
possibility of incitement. The Court takes note of the advice given in the
manual on psychological operations to 'neutralizc' certain 'carefully selected
and planned targets', includingjudges, police officers.State Security officials.
etc., after the local population have been gathered in order to 'take part in
the act and formulate accusations against the oppressor'. In the view of the
Court, this must be regarded as contrary to the prohibition in Article 3 of
the Geneva Conventions, with respect to non-coinbatants of

'the passing of sentences and the carrying out of executions without
previousjudgment pronounced by a regularly constituted court, affording
al1 the judicial guarantees which are recognized as indispensable by
civilized people'

and probably also of the prohibition of 'violence to life and person, in
particularmurder to al1kinds ...'.
256. lt is also appropriate to recall the circumstances in which the manual
of psychological operations was issued. When considering whether the
publication of such a manual encouraging the commission of acts contrary
to general principles of humanitarian law, is unlawful, it is material to
consider whether that encouragement was offercdto persons in circurnstances
where the commission of such acts was likely or foresceable. The Court has
however found (paragraph 121) that at the relevant time those responsible
for the issue of thernanual were aware of, at the least. allegations that the
behaviour of the ccirztrasin the field was not consistent with humanitarian
law: it was in fact even claimed by the ClA that the purpose of the manual332 MlLITARY AND PARAMILITARYACTIVITIES

was to 'moderate' such behaviour. The publication and dissemination of a
manual in fact containing the advice quoted above must therefore be
regarded as an encouragement, which was likely to be effective, to commit
actscontrary to generalprinciples of international humanitarian law reflected
in treatics."I.C.J. Reports1986,pp. 129-130,paras. 255-256.)

424. Moreover, the issues thrown up by the encouragement of brutal conduct
toward the population of Nicaragua were reflected in subparagraph 9 of the
Dispositif, adopted by 14votes to 1,thus:

"Finds that the United States of America,by producing in 1983a manual
entitled 0peracione.ssirbiilogisn guerra de grr~rrillus.and disseminating it
tocontru forces, has encouraged the çomrniçsion by them of acts contrary
to general principles of humanitarian Iaw; but does not find a basis for
concluding that anysuch acts which may have been committed areimputable
to the United States of America as acts of the United States of America:"
(ibid., p. 248).

In the submission of Nicaragua thesignificancewhich the Court has so obviously
attached to this facet of the conduct of the United States should be reflected
appropriately in the award of reparation for what is evidently a classical instance
of moral damage.

(vii) HurdsliipCar~sedto the People (IN icuragua

425. Apart from the actual atrocities committed against the population by
the contra forces and the physical consequences of the armed attacks launched
against centres of population, the covert war and the economic pressure exerted
against Nicaragua have caused hardship to the people of Nicaragua. Large
numbers of people have had to fleethewar zones and ciiltivated areas have been
abandoned. lt may be recalled that the Court stressed the element of hardship
to human beings (in respect of a relatively small group) in its Judgment in the
case concerning United States Diplornaticund C'onsularStaff in Tchran. (I.C.J.
Reports 1980, p. 42, para. 91.)
426. The general impact of the United States "intervention" and the damage
resulting cannot be measured exclusively in terrns of deaths, injuries, material
damage and otlier Iosses to the economy. There are additional social eKects

arising from the diversion of resources to purposes of national security and a
progressive deterioration of the infrastructure.The particular results of this
weakening of the means of providing health services and education, in a country
in which the general standard of living is very low, are reflected in the statistics
relating to infantortality and illiteracy (see data in Ann1.2).

(viii) The Court's Order of 10 Muy 1984 as a Circumstunce Relevant to Moral
Damugr

427. The particular scale and significance of the threat to the sovereignty and
political independence of Nicaragua were fully recognized in the operative part
of the indication of provisional measures contained in the Order made by the
Court on 10 May 1984. The second paragraph, adopted by 14 votes to I,
provided as follows :

"The right to sovereignty and to political independence possessed by the
Republic of Nicaragua, like any other State of the region or of the world,
should be fuliy respected and should not in any way be jeopardized by any military and paramilitary activities which are prohibited by the principles of
international law, in particular the principle that States should refrain in
their international relations from the threat or use of force against the
territorial integrity or the political independence of any State, and the
principle concerning the duty not to intervene in matters within theomestic
jurisdiction of a State, principles embodied in the United Nations Charter
and the Charter of the Organisation of Arnerican States." (1C.J. Reports

1984, p. 187.)
428. The Government of Nicaragua would respectfully remind the Court that
in its Judgrnent on the Merits it was felt necessary "that it should re-emphasize,
in the light of its present findings" the indication set forth above. In the
submission of the Government of Nicaragua this indication, addressed as it was
solely to the Respondent State, constitutes a circumstance relevant to the
determination of reparntion for moral damage.

(ix) The Disregurd of the Court's Injunctive Drciarution as a. ~ircumsto~ce
Relevant tcMoral Damcrge
429. The Court responded to the request contained in the Mernorial of

Nicaragua by a decision by way of an injunctive decfaration to the effect that
"the United States of America is under a duty immediately to cease and to
refrain from al1 such acts as may constitute breaches of the foregoing iegal
obligations" (Dispositif, subpara. 12). This is obviously the linchpin of the
structure of findings.
430. It is a matter of public record that the United States has chosen to
disregard this decision of the Court and the Government of Nicaragua desires
to indicate its opinion thatsuch blatant disregard ofa decision of the Court, the
principal judicial organ of the United Nations, constitutes an important circum-
stance relevant to the determination of reparation for moral damage in these
proceedings. As the Court has observed in relation to the provisional measures
indicated on 10May 1984:

"Furthermore, the Court would draw attention to the further measures
indicated in its Order, namely that the Parties 'should each of them ensure
that no action of any kind is taken which might aggravate or extend the
dispute submitted to the Court' and
'should each of them ensure that no action is taken which might prejudiçe
the rights of the other Party in respect of the carrying out of whatever
decision the Court may render in the case'.

When the Court finds that the situation requires that measures of this kind
should be taken, it isincumbent on each Party to take the Court's indications
seriously into account, and not to direct its conduct solely by reference to
what it believes to be its rights. Particularlythis so in a situation of arrned
conflict where no reparation can efface the results of conduct which the
Court may rule to have been contrary tointernational law." (LC.J, Reports
1986, p. 144,para. 289.)

(x)The Jnfringementofthe Freeciomof Comnzunicutionsand of Muritirne
Commerce

431, In its Judgment on the Merits (1C.J. Reports 1986,paras. 214, 253) the
Court gives due significance to the principle of freedom of maritime communi-334 MlLITARY AND PARAMILITARYACTIVITIES

cations recognized by the Court in the Corfi Churuielcase (Merits), I.C. J. Reporrs
1949,page 4 at page 22. In particular, the Judgment on the Merits in the present
proceedings points out that :

"... it is clear that interference with a right of access to the ports of
Nicaragua is likely to have an adverse effect on Nicaragua's economy and
its trading relations with any State whose vessels enjoy the right of access
to its ports. Accordingly, the Court finds, in the context of the present
proceedings between Nicaragua and the United States, that the laying of
mines in or near Nicaraguan ports constituted an infringement. to Nica-
ragua's detriment, of the freedom of communications and of maritime
commerce." (1.C.J. Reports 1986, p. 129.para. 253.)

432. In the submission of the Government of Nicaragua this detriment pointed
to should be given substance in that it be recognized as a signifiant element in
the justification of an award of compensation for moral damage.

F. Compensationfor Moral Damage : the Claim

433. In the submission of the Government of Nicaragua a claim in respect of
moral damage to the Republic of Nicaragua is justified on the following bases,
either taken as independently sufficient or as collectively sufficient.
First: by reason of the general principles of public international law.
Second: as il consequence of the specific recognition and approval of the
principle of compensation for moral damage by the United States Government
in the proceedings in the Acriul Incident case and otherwise.
Tlriril..by reasonof the particular elements of affront to international public
order present in these proceedings and which are relevant to the determination
of the propriety and quantum of reparation for moral damage.
434. In accordance with subparagraph 13 of the Dispositif of the Judgment
on the Merits the Government ofNicaragua clainiç the sum of US$2?443,200,000
ils the just and equitable reparation for the moral damage resulting from the
illegal activities of the United States (apart from the claims relating to the
violations of Nicaragua's sovereignty). CHAPTER 9

THE PERIODFORWHICHREFARATIONMUSTBE CALCULATED

435. The function of this Chapter is to analyse the temporal dimension of the
United States obligation to make reparation for the damage and injuries done

to Nicaragua through its internationally wrongful acts. This requires a determi-
nation of the duration of the internationally unlawful acts committed by the
United States, more particularly the date on which they began and the date, if
any, on which they ended. As the International Law Commission stated in its
1978Report to the Gerieral Assembly, these determinations
"may be decisive in resolving a whole series of problems in which temporal
element is involved. That is the case, for example, with regard to the
determination of the extent of the injury caused by a given internationally
wrongful act and, consequently, of the amount of reparation owed by the
State that has comrnitted the act in question." (Yearhookof the Internulional
Lari~.Cornrnission1,978,II(Part Two), p. 87.)

436. Nicaragua submits that by virtue of subparagraphs 3, 4 and 13 of the
Dispositif, the United States is under an obligation to make reparation to
Nicaragua under subparagraphs (3) and (4) of the Dispositif in an amount
measured by the damage inflicted by the military and paramilitary activities
between December 1, 1981, at the latest and the present, and for as long into
the future as it continues to act in the manner found by the Court to be unlawful.

(i) The Date fromWhichReparationShould Be Cakulated

437. The Court determined that the internationally unlawful conduct of the
United States consisted in "training, arrning, equipping, financingand supplying
the contra forces or otherwise encouraging, supporting and aiding rnilitary and
paramilitary activities in and against Nicaragua ...".(Dispositif, subpara. (3),
and, to the extent that these acts "involve the use of force", ibid su,bpara.(4),
1.C.J. Reports 1986,pp. 146-147.)The breach may be considered to be ri"breach
of an international obligation by a complex act" within the meaning of the
International Law Commissiondraft articlesonState Responsibility, Article25 (3).
See Yeurbook($the Interna~ionulLUw Commission,1978,11(Part Two), page 80.
The unlawful activity was also a wrong having ri"continuing character" within
the meaning of Article 25 (ibid). It çonsists of "a suçcession of actions or
omissions ... in respect of the same case"(ibid), although it is not excludedthat
some acts in the series might independently be violative of international law. In
the present case, the "succession of actions" begins with the officialpresidential
finding authorizing the provision of covert assistance to theontras,and includes
the various appropriations of funds by the Congress, the expenditure of funds for
the purchase of arms and equiprnent, the deliveryof these supplies, the provision

of trainiiig, intelligence information and logistic support, etc. All of these were
acts of organs of the United States and are fully imputable to it.
438. According to Article 25 (3), in the case of a complex act the breach does
not "occur" until "the moment when the last constituent element of that complex
~ictis accomplished" {ibid). Nevertheless, the Article continues, the duration of
the breach "extends over the entire period between the action or omission which
initiated the breach and that which completed it" (ibiilj. 336 MlLITARYAND PARAMILlTARYACTIVITIES

439. In the present case, the action that initiated the complex act took place
sometime in late 1981. President Reagan made the Finding required by United
States law to authorize covert activities against Nicaragua in November 1981.
The significance of this date is confirmed by evidence that organized contra
. activity began to increase around that time. The affidavit of Edgar Chamorro
stated that the "mergers arranged by the CIA" of "the previously disparate
armed bands" into a single armed opposition force took place before August

1981. (Merits, para. 94.) Further, according to the testimony of Comandante
Carrion, " 'organized rnilitary and paramilitary activities' began in December
1981". (Merits, para. 93.)
440. Thus, "the action or omission which initiated the breach" occurred by
1 December 1981 at the latest. It naturally follows that the United States obli-
gation to make reparation runs from that date'.

(ii) The Date to WhichReparation Should Be Calculated
441. In this case the international wrong did not end with the completion of
the complex act. The breach is a "continuing wrong", draft article 25(l), which

endures as long as the United States persistsin the activities found to be illega12.
Thus, the United States is under a duty to make reparation in an amount
measured by the damage done by the military and paramilitary activities as long
as they continue3.

'The discussionin the text characterizesthe wrongfulmnduct adjudgedby the Courtas a
complexact culminittingin or followedby an act havinga mntinuing character. Thesarne
conductmightequallywellbe charactenzedas a compositeact. The seriesof actionsinvolved
in the provisionof suppiies,equipment.training,weaponsand logisticalandintelligencesuppofl,
repeated over theperiod in issue,eçtablishedan integratedpattern of wrongful UnitedStates
activity.The alternativecharacterizabonwouldhave no cffecton thediiration of the brearh,
however.Accordingto 1LCdraft Article25(2), that "exlendsover the entireperiod from the
or omissionsare repeated".The firstact constitutingtheu)mpositeact occurradby 1December
1981,assbom above,and the patternis beingrepeatedto the present.
The International Law Commission'sReport to the GeneralAssemblyincludesexamples
of a continuing wrong: unlawful blockade of foreign ports, unlawful occupation of the
territory of a foreign State, unlawful detention of a foreign official. Yearhook of the
InrernaliunalLaw Commission, 1978, 11(Part Two), page 90. The breach in the present
case can be easily analogized to these. Supplying the contrus with ams, training,
equipment, financing, logisticalsupport, etc., constituted a breach of international law, in
the same way that the creation of an illegalnaval blockade would constitute a breach. The
continuous or repeated supplying of arms, etc. - as happens in the present case -
establishesthat the breach is a continuing violation,just as the maintaining of a blockade
is a continuing violation.
3The Court was unable to find "that the respondent State 'created' theconiru force in
Nicaragua", 1.C.J. Reports 1986,paragraph 108, page61, because "there is someevidence
to showthüt someamed ov~ositionto the Government of Nicaragua existedin 1979-1980.
even before any interference'orsupport by the United States(~d. ,ara. 93,at 53.)~hus;
damage that could havebeen accomplishedby these forces without any outside assistance. the
The Court also found, however, that these bands oprrated "in a disorganized way and
with limitedand inerectual resources.. .(Id., para. 108,at 62.) Weare therefore entitled
to conclude that the damages that woujd have been done absent United States aid are de
minimis. This conclusion is borne out by the evidence, which shows that the material
damage from contra activities in 1980 amounted to three killed and wounded and only
$1.5 million in property damage. For 1981, whenassistance was given for the last manth
or two of the year, the figurescorto 70 killedand wounded and $7.4million in property
damage. (Ann. 1.2, pp. 9, 17.)There is no record of (:ontrucasualties in 1980. For 1981,
there were42 killed and wounded and 20 captured. (Id., p. 23.) 442. In its Judgrnent on the Merits, the Court identified 30 September 1984
as the cut-off date for United States "finance for supporting the military and
paramilitary activities of the contras". (Merits, para. 97.) This conclusion was
based on two factors. First, the record before it contained evidence showing,
erroneously as it turns out, that United States assistance was "limited to
'humanitarian assistance' " after that date.(Ibid (The Court itself implied that
this assistance would not qualify as "humanitarian" under the principles of

international law. Ibid., paras. 242, 243.) Secondly, the Court perforce rendered
its Judgment on the basis of the evidenceof record as it stood on 20 September
1985, at the close of the oral hearings on the rnerits, which could include no
information about United States activities thereafter. (Para. 58.)
443. In the present phase, Nicaragua has introduced evidence to show that
despite the understanding expressed by theCourt in the Judgment, United States
activities in al1 the forms mentioned in the Dispositif - and with it the
responsibility ofthe United States to make reparation - continues down to the
present. This evidence is presented in Annex X and the attachments thereto. In
brief, the evidence establishesthe following.
444. First, despite the legislative prohibition on military aid, iri the period
before the close of the oral hearings from 1October 1984to 30 September 1985,
and thereafter until 18 October 1986, officiaisof the United States National
SecurityCouncil, the Central Intelligence Agency,and other organs of the United
States operated a far-flung secretnetwork to ensure the continued provision of
money, arms, transport, intelligence,training and other assistance to the contras.
A full account of this activity is contained in the Report of November 1987 of
the Iran-Contra Committees of the United States Senate and House of Repre-
sentatives, which Nicaragua has submitted to the Court (hereafter, the "Iran-

Contra Report"). Thereafter, beginning in October 1986 the United States
resumed overt military assistance to the contras. Although in February 1988,
when the current appropriation expired, the Congress refused to make any
further appropriation, funds, weapons, supplies, equipment and other military
assistance suficient for several months were still in the pipeline. The United
States President has announced his.intention to secute additional Congressional
funding. (Ann. X, p. 44.)
445. In sum, the evidenceshows that United States military and paramilitary
activities, condemned in the Judgment on the Merits, have continued without
interruption until the present.

(a) Evidenceof EventsOccurringheforethe Closeof the OralHeuringsinSeptem-
ber 1985

446. The proof concerning United States secret activitiesagainst Nicaragua in
fiscalyear 1985issummarized in Annex X, A ChronolagiculSiaiementof Evidence
relatingio ConiinuedMilitaryandPararnilitaryActivitiesinand against Nicaragua,
pages 5-37.The Chronological Statement is based primarily on the Iran-Contra
Reporr. It shows that, from 30 September 1984, whenunder the Boland Amend-
ment al1military and paramilitary activityin and against Nicaragua wassupposed
to cease, until the resumption of overt rnilitary aidin October 1986,the United
States conducted a secret full-scaleoperation to maintüin and preserve the covert
war. The Iran-Contra Report summarizes the two years of activity as follows :

"... North had successfuiiy managed, with the approval of his superiors,
the covert program to assist the Contrasfor almost two years ...
... The result was that, with the help of other United States Government338 MILITARYAND PARAMILITARY ACTIVITIES

officials,North managed to provide the Canrruswhat Congress had not :a
full-scaleprogram of rnilitary assistance."(Iran-Contra Report, p. 78.)

447. Lt. Col. Oliver L. North, a member of the National Security Council
staffwith officesin the White House, was the principal operating oflicerin charge
of the program. He acted under the authority and with the approval of his
superiors, Robert McFarlane and John Poindexter, who successivelyheld the
officeof National Security Adviser to the President. He had the authorization
and co-operation of the Director of Central Intelligence, William J. Casey.
Numerous other officialswere heavily invoivedin the operation, including the
Assistant Secretary of State for lnter-American Afïairs, the Ambassador and
CIA Station Chief in Costa Rica, and United States military officersin Central

America. A special "Restricted lnteragency Croup" with representatives €rom
the State Department, CIA and NSC had overall direction of the operation.
448. The President himselfadmitted that he knewand approved ofthe activity:
"Now ... the Contra situation ... There's no question about my being
informed. I've known what's goingon there ... And to suggest that 1 am
just finding out or that things are being exposed that 1didn't know about -
no. Yes,1was kept briefed on that. As a iiiatter of fact, I was very definitely

involved in the decisions about support to the freedom fighters. lt was my
idea to begin with." (Ann. X, p.33.)
There can be no doubt that, even though they rnay have been acting illegally,
North and his superiors were acting as officialsof the United States and their
acts are imputable to the United States. As stated by Judge Ago in his Third
Report on State Responsibility, in determining whether an act is internationally
wrongful, it is irretevant that the State organ has acted in violation of municipal

law. (Yearboakof'tlzeInternational hiv Cnmmissiiin,1971,11(Part One), p. 226.)
449. In the course of their activities, these officialsmade use of a network of
former United States military and intelligence officers, arms brokers, offshore
bank accounts and dummy corporations, referred to by the Congressional
Committees as "the Enterprise". To quote the Rt?portagain,
"The Enterprise, functioning largely at North's direction. had its own
airplanes, pilots, aifield. operatives, ship, secure communications devices

and secret Swissbank accounts." (Iran-Contra Repart, p. 4.)
450. The activities of North and the other United States officialsand private
individuafs assisting the contras during this period were manifold. The first
objective was to restore the flow of funds to the contrus that Congress had cut
off. To this end, they acted in the name of the United States to secure con-
tributions from other countries and from private sources in the name and using
the prestige of the President. (Tbiri.,pp. 85, 90-91, 100.) In all, the Enterprise

raised at least US$36million in the 1984-1985period.
451. North and his associates used the funds to continue the military and
paramilitary activities in and against Nicaragua. These activities included the
procurement of infantry weapons - AK-47 rifles,RPG-7 rocket launchers. light
machine guns, and SA-7 surface-to-air missiles - Sased on lists drawn up by
coniracommander Bermudez and reviewed and revised by North. (Ibid., p. 50;
see also ihid.,p. 48.)
452. In addition, the United States provided extensive intelligenceinformation
to the contras.

"The CIA and DOD [Department of Defense] could not provide mili-
tary intelligencedirectly to the contrus,so North provided it himself. North340 MILITARY AND PARAMILITARYACTIVITIES

of secret United States military assistanceto the canfrus.By that time, however,
the Congress had acted to renew overt military aid for fiscalyear1987.
458. The evidence summarized above rnust be considered in order to correct
the mistaken conclusion into which the Court was led by the United States

legislation purporting to ban assistance to the contrasin fiscal year 1985 and
confining it to "humanitarian aid" in fiscalyear1986.Nicaragua, like any other
litigant, has a duty to assist the Court in its consideration of the case before it
and is under a burden of due diligence to discover and present al1 evidence
relevant to the determination. In the ordinary case, the Applicant can be held to
the consequences of any failure toproduce proof of facts.
459. This is no ordinary case, however, and there was no failure of diligence
by Nicaragua. High officiaisworking directly for the United States President
deliberately concealed the relevant evidencenot only from the Court but from
the Congress and from the people of the United States and the world. (See
generally, Ann. X, pp. 31-37.)Suppose that the United States had appeared and
participated in the merits phase of the case and had falsely represented to the
Court that only humanitarian assistance was bzing sent to the contras after
September 1984. Crin there be any doubt that if the misrepresentation were
discovered while the case was still pending, in whatever phase, the Court would
hear evidence as to the true state of affairs'?To refuse to do so would permit the
offending Party to benefit from the breach of its duty to the Court and inflect
would condone the wrong.
460. Although the United States has decided not to appear in this case, it
remains a Party and as such is under a duty not to deliberately mislead the

Court. It has violated this duty even thoughit was not in the courtroom. In its
Judgment the Court commented on the release by the United States State
Department at the time of the oral hearings of a document entitled Revolution
Bej'ondOur Borderssetting forth the position of the United States on the facts
and law of this case. The document was brought to the notice of the Court by
the United States Information Office inThe Hague after the oral hearings 'on
the merits had started. and wasin fact referredto in the Judgment. (IJ.Reports
1986, para. 73, at 44.) It was misleading in omitting any accouiit of this secret
United States assistanceto thecuntrusduring the period covered.The information
it purported to give should be viewedwith this in mind.
461. Finally, quite apart from any duty the United States may owethe Court
as a Party in the case, the fact is that the Court proceeded on an appreciation
of the situation existing after September 1984that we now know to be mistaken.
The mistake was not due to any fault of Nicaragua but to deliberate and
wrongful concealment by the United States. The Court should consider the
evidence Nicaragua has introduced to correct the misrepresentation of the
situation by the United States.

(b) Evidence (iE venis Occurringclfierthe Closeof the Oral Heurings

462. In theJudgment on the Merits, the Court said that
"general principlesas to the judicial process require that the facts on which
its judgment is based should be those occurring up to the close of the oral
proceedings on the merits of the case." (Merits, subpara,8,)

463. In this passage, the Court was referring to ils Judgment on the Merits,
and it is certainly true thatnder "general principies of the judicial process", it
would ordinarily be improper for the Court to take notice of facts occurring
between the final submission of the case by the Parties and the rendition ofthat Judgment. Tt is equally clear that the same principles do not preclude the
presentation, in a later damages phase of the samr case, of evidence to show
the continuation of the conduct found to be unlawful in the merits phase and
quantifying the lossesresulting from it. In its Memorial on the Merits, Nicaragua
anticipated this possibility and"reserve[d] the right to seek additional compen-
sation for darnage caused after 31 December 1984, and to present evidence in
support of such claim". (Memorial of Nicaragua, Merits, IV, p. 38.)
464. The Court's prior cases support the view that it may hear evidence and
argument concerning events occurring after the close of oral hearings. ln the
Ni~clearTests cases, the Court found it "necessary" to consider statements of
the French Government, both those that were made before the oral proceed-
ings and callcd to its attention at that time "and those subsequently made".
(I.C.J. Reports 1974,at 264.) The Court said:

"lt would no doubt have been possiblefor the Court, had it considered
that the interests of justice so required, to have aflorded the Parties
the opportunity, e.g., by reopening the oral proceedings, of addressing to
the Court comments on the statements made since the close of those
proceedings." (ibid.)

465. The Court quoted this passage in its Judgment on the Merits in the
present caseand remarked further that "[nleither Party has requested such action
by the Court; ..." (Merits, para. 58.) The relevant passages ofthe Court's
Judgment do not suggest that consideration of evidence offacts occurring after
the close of oral hearings on the merits is improper. On the contrary, the
implication is that the Court is fully empowered to hear such evidence "if the
interests of justice so require", eitheron its own motion or at the request of
a Party.
466. The interests ofjustice inthis case surely require the reception of evidence
of events subsequent to September 1985. As noted above, the internationally
unlawful conduct of the United States involvesa wrong of a continuing nature.
Without this evidence,the Court will be unable to quantify the reparation that
the United States is obligated to make under subparagraph (13) of the Dispositif.
Since the case is still pending, there is no need to "reopen the oral proceedings"
for thispurpose.
467. The evidence of events occurring after the close of the oral hearings in
September 1985demonstrates that the covert program ofUnited States military
and paramilitary activities continued until October 1986.On 18 October 1986,a
new appropriation of $100 million for fiscal year 1987 took effect. Of this
amount, $70 million wasavailable for military "assistance", withthe remaining

$30 million restricted to so-called "humanitarian" assistance. The limitations
that previously had prohibited the C1A from using its secret "Reserve for
Contingencies" were also lifted, United States Senate Majority Leader Robert
Byrd informed in a Senate debate that as much as $400 million wereto be
allocated for the contras from this source'. 30th the frequency and inten-
sity of contra attaçks reflected the new infusion. After 30 September 1987, a
series of continuing appropriation bills provided additional funds. (Ann. X,
pp. 37-46.)
468. Nicaragua does not seek any new determination of liability on the basis
of this evidence.That the United States has breached its international obligations
"by training, arming, equipping, financing and supplying the contra forces" has

'132Cong. Rec. SI 1507( 13August 1986)been established by the Judgment on the Merits. Evidence of the continuation
of these activities after the close of the oral hearings shows that the liability
creating actions of the United States have continued to the present.

(c) Danlage Residling frnm UrilairlfiUnitedSrates Actions Since the Closerf tlie
Oral Heurings

469. Nicaragua has also introduced evidence of the occurrence and moii-
etary value of damage to persons and property resulting from the United States
military and paramiiitary activities since the close of the oral hearings. (Ann. I.
26.) This information is essential to calculate the precise amount of the total
reparation that will wipe out the consequençes of the United States unlawful
acts. Evidence of the quantum of harm occurring after the close of the hearing
on the merits is admissible under any one of three independent legal principles
on which the compensatory obligation of the United States may be based.

(a) The damages siiown are the result of continuing internationally unlawful
conduct of the United States. As noted above, iriNicaragua's view, the United
States military and paramilitary activities constitute a breach of an international
obligation of a continuing character and entails liability for al1harm caused by
itduring the period of the breach. (See Chap. 1,supra.)
(b) The damage done by the military and paramilitary activities in the period
after the close of the oral hearings results from the acts of the United States
before September 1985that the Court adjudged to be unlawful. As the Court
held, these United States acts were "crucial to the pursuit of their activities".
(Para. 110.) The Court pointed to the continuation of cnntru activity after the

prohibition of military aid in September 1984 as evidence that they were not
completely dependent on United States assistance. We now know, however, that
despite the prohibition, military aid continued in secret up to and after the oral
hearing. Without this continuing United States action, the contras could not
have achieved the level of organization and military efficacy they attained. The
contra forces would have remained a handful of scattered bands of irregulars,
engaged in cattle rustling and border raids as they did before the beginning of
the internationally unlawful action of the United States. But for this action they
would not have had the military capability to undertake the operations conducted
in the period after the close of the oral hearings and toinflict the damage shown
by the evidence.
jc) In subparagraph (12) of the Dispositif the Court held that the United
States was "under a duty immediately to cease and to refrain from al1such acts
as may constitute breaches of the foregoing legal obligations; ...", The United
States has failed to comply with the Court's injunçtion. The United States
is therefore now in violation of the international legal duty imposed by the
Judgment. That violation entails the same obligation to compensate for the
resulting damage asany other breüch of an international obligation. The evidence
of contru activities after the Judgment on the hlerits quantifies the amount of
reparation due for this breach. Before the close of the oral hearings, Nicaragua

was, of course, unable to make submissions of fact or law concerning the breach
of the obligation imposed by the Judgment alid the reparation due on that
account. The breach had not occurred and the obligation had not accrued at
that time. The Applicant State should therefore have the opportunity now to
introduce evidence of the breach of this obligation and the value of the
losses incurred. 470. Liability in the amount of the losses due to the rnilitary and paramilitary
activities aver the entire period from 1 December 1981to the present is clear as
a matter af legal principle '.Anything less would Failto fulfil the command of
Chorzbiv tbat "reparation must, as far as possible, wipeout al1the consequences
ofthe illegalact ...".Nicaragua has introduced evidenceto establish the quantum
of this harm in Annex 1.2b. There is nothing in the Statute or Rules of the
Court, nor in the principles of international law, to prevent the Court from
considering any of this evidence to determine the amount of reparation the
United States is obligated to pay in respectof its internationally unlawfulactions
in "training, arming, equipping, financing and supplying the contro forces ...".

nature, it and its consequencesmay persist evenafterjudgment in the current phase.uing CONCLUSION

471. In this çoncluding chapter the Applicant State intends to present its views
on certain questions subsidiary to the general issue of the assessrnent of com-
pensation and to formulate its Submissions. However, first of al1the Govern-
ment of Niçaragua findsit necessaryto explore someimportant procedural questions
which inevitably arise in the unusual circumstances of this case.

A. Article 53 of the Statute

472. The Court does not need to be reminded that the proceedings in the merits
phase of this case took place under Article 53 of the Statute and, according to the
position adopted by the United States in its Note dated 13 November (signed by
the Deputy-Agent), this aspect of the proceedings will remain during the present
phase. In the course of preparing and presenting the case on the merits the
Government of Nicaragua adopted a constructive approaçh to the problems of
proof and did not in any sense seek to lay emphasis on the application of the
provisions of Article 53. However, as the proceedings move through the present
phase the Applicant State considers it to be useful to ofler certain points for the
consideration of the Court, which points relate to the problems of adrninistering
justice ina casesuch as the present.
473. The disadvantages hced by an Applicant Stlite in proceedings involving
a non-appearing Respondent Stnte are often referred to: see, for example, the
views of Sir Gerald Fitzmaurice, British Year Book cf Intrrnational Lurv,

Volume 51 (1980), pages 89-122 ; and Thirlway. Non-appeuruncc before the
lnrernutional Court clfJustice, Cambridge, 1985,pages 137-157.As Fitzmaurice
points out the result of non-appearance is that the Applicant State "becomes
severely handicapped in the presentation of its case before the Court" and the
principle of "equality of arms" as between litigants is placed in jeopardy (op.
cit.,p. 91).
474. This being said, it is the intention of Nicaragua to make certain proposais
in a constructive spirit and with thepurpose of assisting the procedural economy
of the present phase of the case.
475. In the first place the Govemment of Nicaragua would respectfullydraw the
attention of the Court to the advantages presented by the provisions of Article 49
of the Statute, and Articles 61 and 62 of the Rules (see Rosenne, The Law und
Practiceof the IntcirnationulCourt, 1985,pp. 576-578;and Guyomar, Commentaire
du Règlementde la Courintern~tinnaledt.Justice, 1983, pp. 400-413). Inthe absence
of the Respondent State the development of the pleadings is less suited to the
pointing out and refinement of issues and both the Court and the Applicant State
are placed at a certain disadvantage. In the circumstances of the present case it
would be of considerable assistanceto the Government of Nicaragua if,at a time

convenient to the Court, Nicaragua weregivensome indications as to the particular
issuesof law on which the deliberations of the Coiirt were likelyto focus or issues
of fact which the Court wishes to explore or to explore further. It goes without
saying that an indication sufficientlyin advance of the opening of the oral heanngs
would be of particular assistance to the Applicant State. B. Informal Presentation of Material on the Part of the Respondent State

476. In the same context of seeking to promote the efficiencyand economy of
the proceedings Nicaragua requests that, if the Respondent State transmits by
some informa1mode material to the Court which, in a normal procedural context,
would have been presented as evidence, the Applicant State be accorded the
opportunity to comment upon material presented by informal methods.

C. The Scope of the Present Proceedings

477. The unusual character of the present proceedings involves a further
procedural issue of great practical significance. The wrongs to which several
parts of the Dispositif relate involve acts of State of a continuing character
according to the draft articles on State Responsibility provisionally adopted by
the International Law Commission. The relevant provisions are contained in
Article 25 as follows:

"Moment and duration of the breach of an international obligation by
an act of the State extending in time
1. The breach of an international obligation by an act of the State having
a continuing character occurs at the moment when that act begins.
Nevertheless, the time of commission of the breach exrends over the entire
period during which the act continues and remains not in conformity with
the international obligation.
2. The breach of an international obligation by an act of the State,
composed of a series of actions or omissions in respect of separate cases,
occurs at the moment when that action or omission of the series is accom-
plished which establishes the existence of the composite act. Neverthe-
less, the time of commission of the breach extends over the entire period

from the first of the actions or omissions constituting the composite act
not in conformity with the international obligation and so long as such
actions or omissions are repeated.
3. The breach of an international obligation by a complex act of the
State, consisting of a succession of actions or omissions by the same or
different organs of the State in respect of the same case, occurs at the
moment when the last constituent element of that complex act is ac-
complished. Nevertheless, the time of commission of the breach extends
over the entire period between the action or omission which initiated the
breach and that which completed it."
478. The continuing character there referred to is relevant to the aspects of
the Dispositif relating in particular to breaches of the principfe of non-
intervention. However, other findings are relevant, including the violation of
sovereignty resulting from overflights.

479. As the Court will appreciate the Applicant State is justified in relying
upon the perfectly logical principle of continuing acts. The question which
therefore arises is the adjustment of the procedural modes available to the
realities of the situation, that is tothe continuation on the part of the United
States of policies incompatible with the Judgment of the Court on the Merits.
Given the fact thatit isimpossible to predict when these breaches of international
law will cease it isimpossible to make a final assessment of the reparation called
for in relation to the continuing acts.
480. In the submission of the Government of Nicaragua, the only reasonable346 MILlTARY ANI) PARAMILITARY ACTlVlTlES

posçibility at this stage isto make a valuation of the damage that these continuing
acts have already caused to Nicaragua. As to the future, reparation can only be
assessed when the breaches having a continuing character and the consequences
of those breaches have çeased. At that time, the repliration will have either to
be agreed between the Parties or, if this proves to be impossible, to be the subject
of a further phase of the present proceedings.
481. In this context, it must be recalled that in its Judgment on the Merits the
Court stltted that no provision in its Statute debars it from awarding reparation

on a provisional basis. But, at that time, it felt that sucha decision would not
be "appropriate" at that stage of the proceedings. In the words of the Judgment :
"There remains the request of Nicaragua (paragraph 15 above) for an
award, at the present stage of the proceedings, of $370,200,000as the 'mini-
mum (and in that sense provisional) valuation of direct damages'. There is

no provision in the Statute of the Court either specifically empowering
the Court to make an interim award of this kind, or indeed debarring
it from doing so. In view of the final and binding character of the Court's
judgments, under Articles 59 and 60 of the Statute, it would however only
be appropriate to make an award of this kind, assuming that the Court
possesses the power to do sol in exceptional circumstances, and where the
entitlement of the State making the claim was already established with
certainty and precision. Furtliermore, in a case in which the respondent
State is not appearing. so that its views on the matter are not known to the
Court, the Court should refrain from any unnecessary act which might
prove an obstacle to a negotiated settlement. It bears repeating that

'the judicial settlement of international disputes, with a view to which the
Court has been established, is simply an alternative to the direct and
friendly settlement of such disputes between the Parties; as consequently
it is for the Court to facilitate, sofar as is compatible with its Statute,
such direct and friendly settlement ...'.(Free Zones of Upper Suvoyand
the Di.striiof &.Y, Order rf 19 August 1929, P. C.I.J.,Stries A, No.22,
p.13.)

Accordingly, the Court does not consider that it can accede at this stage to
the request made in the Fourth Submission of Nicaragua." (I.C.J. Reports
1986, p. 143.para. 285.)

482. Thus the Court did not consider an interim award "appropriate" by
reference to a series of considerations which do not obtain at the time of the
presentation of the present Memorial. At this stage the entitlement of the
Applicant State is "established with certainty and precision", and there are, in
a number of respects. "exceptional circurnstances". Moreover, ri negotiüted
settiement is not in prospect.
483. In the light of the principle accepted by the Court that an interim award
may bejustifiable if certain conditions are fulfilied,the Government of Nicaragua

requests the Court :
(a) to award Nicaragua a sum as effective and complete compensation for al1
the damage that will be proved at the date of the Judgment (or of the
closure of the proceedings), whether or not such damage is caused by
breaches of international lawextending in tirne or by acts not extending in
time; and

(b) to maintain the rights of Nicaragua to compensation for all damage which
might ocçur as a result of these breaches having a continuing character, and as a consequence to maintain the power to reopen the proceedings if and
when the circumstances generally and the interests of justice, in particular,
make such a course necessary.

D. TheCalculation of Present Value

484. The issue of compensatory interest may be conveniently dealt with at
this juncture in the Memorial. There is alarge literature and the principle of
compensatory interest is generally accepted both in doctrine and in the jurispru-

dence of international tribunals. The general principle was well stated by the
United States-German Mixed Claims Commission in its Administrative Decision
No. ILI(1923) :
"Applying the principles announced in Administrative Decision No. II at
pages 7-8, the Commission holds, that in al1claims based on property taken
and not returned to the private owner the measure of damages which will
ordinarily be applied is the reasonable market value of the property as of
the time and place of taking in the condition in which it then was, if it had
such market value; if not: then the intrinsic value of the property as of such

time and place. But as compensation was not made at the time of taking,
the payment now or at a later day of the value which the property had at
the time and place of taking would not make the cfaimant whole. He was
tlirn entitleto a sum eq~ialto the value of his property. He is nori.entitled
to a sum equal to the value which his property then had plus the value of
the use of srichsunl for the entire period during which he is deprived of its
use. Payment must be made us r$ the time of taking in order to meet the
full measure of compensation." (Repor~sof I~nternationulArhitrul Aivarcls,
ll? p. 64 ai p. 66.)

485. At the same time the award of interest as such is but one of several
techniques available for the implementation of the principle of effectiverepara-
tion. As the passage from the decision of the Mixed Claims Commission clearly
indicates. what is at stake is the use of a technique to produce a figure which
represents the present value of the compensation. Thus, provided an appropriate
technique is employed in order to achieve an "actualization", the principfe of
compensatory interest is applied, so to speak, mntaiis niutcrndis.
486. ln respect of the reparation claimed for physical damage to property,
loss of production, other consequential economic loss, and defence costs, the
Government of Nicaragua has used the methodology for the calculation of
present value described in detail in Annex V1.2.
487. The appropriate rate of interest should, in the submission of the
Government of Nicaragua, be a function of the principle of effectivereparation.
Consequently the rate must depend upon general economic conditions and
markets: see Brownlie. System ($the Luivof Nations: Srute Respnnsibility, Part 1,
1983,page 229. In iis Judgment in the " Wimbli~don"case (1923), the Permanent
Court adopted the view that the rate of interest isreirztive to the "present
financial situation ofthe world" and "the conditions prevailing for public loans".
(IY23. P.C.L J.. SeriesA, No. 1, p. 32.) The methodology adopted by Nicaragua

reflectsthese criteria and is explained in Annex V1.2.
488. On the basis that the principle of effective reparation has been applied
by other means in each case the question of compensiitory interest (or calculation
of the present value) does not arise in the followingcategories of claim presented
in this Memorial :348 MILITARYAND PARAMILIWRYACTlVlTIES

(a) The claim to reparation in respect of deaths and personal injuries;
(b) the claim to pecuniary satisfaction in respect of the four types of violation
of sovereignty;and
(c) the claim to reparation in respect of moral damage.

E. Costs

489. Article 64 provides that "unless otherwise decided by the Court, each
party shall bear its own costs". This text, taken togetherwith Article 97 of the
Rules, indicates the existence of a discretionary power to be exercisedby the
Court in the light of al1 the relevant circumstances, and according to general
principles oflaw.
490. At this stagetheGovernment ofNicaragua presentsthe formal submission
that this is an appropriate case for costs on the basis of the considerations related
fuily in Chapter 8 (concerning reparation for moral damage). However, the
Government of Nicaragua wishes to reserve its presentation of the claim for
costs until such time as the Court finds it convenient to indicate its viewson the
precise procedural implications of Nicaragua's claimfor costs. As the Court will

no doubt appreciate, it is inappropriate to present a claim in the absence of
adequate knowledge of the procedural framework: see the Mernorial of
Israel, AeriulIncident case (IsraelV.Bulguriu, etc.), I.C.J. Pleudings,page 114
(para. 120); and Rosenne, The Law and Practicr cf the In~ernaiionaC l oirrt
Jirstice, 2nd edition, 1985,pages 592-593.

F. Post-Judgment Interest

491. The Court is requested to include the payment of interest in its award
of compensation to the Applicant State in the present proceedings (cf. the
"Wiwbled(~n", 1923, P.C.I.J., Series A, No. 1, pp. 32, 33). SUBMISSIONS

492. The Government of the Republic of Nicaragua asks the Court to adjudge
and declare as follows:
493. A. In accordance with the operative part of the Judgment of the Court
dated 27 June 1986the United States is under an obligation to make reparation
to the Republic of Nicaragua for the following types of injury caused by breaches
of the pertinent obligations of an international law character;thus:

First: In respect of the deaths and personal injuries relating to the findings
contained in subparagraphs 3 and 4 of the operative part of the Judgment: the
sum of US$900 million.
Second: In respect of material injury to property relating to the findings
contained in subparagraphs 3 and 4 of the operative part of the Judgment
(but apart from the losses caused by the specificattacks and mining of harbours
referred to in subparagraphs 4, 6, 7 and 8): the surn at present value of
US$275,400,000.
Thircl: In respect of the production losses relating to the findings contained in
subparagraphs 3 and 4 of the operative part of the Judgment (but apart from
the losses caused by the specific attacks and mining of harbours referred to in

subparagraphs 4, 6, 7 and 8): the sum at present value of US$1,280,700,000.
Forrrth: In respect of the material injury to property consequent upon the
specific attacks to which the finding in subparagraph 4 of the operative part of
the Judgment relates, together with the rnaterial injury to property consequent
upon the mining of Nicaraguan harbours to which the findings in subparagraphs
6, 7 and 8 of the operative part of the Judgment relate: the surn at present value
of US$22,900,000.
Fifth: In respect of the security and defence costs resulting from the unlawful
conduct of the United States as defined in subparagraphs 3 to 9 inclusive of the
operative part of the Judgment: the surn at present value of US$1,353,300,000.
Si-xth:In respect of the damage caused by the general embargo on trade which
is the subject of the findings contained in subparagraphs 10 and 11 of the
operative part of the Judgment :the sum at present value of US$325,400,000.
Srventh; In respect of the darnage caused to development potential of
Nicaragua consequential upon the unlawful conduct of the United States as
defined in subparagraphs 3 to 9 inclusive of the operative part of the Judgment:
the sum at present value of at least US$2,546,400,000. which quantifies GDP
losses but not their social consequences which cannot be valued technically in
monetary terms.

Eighth: Without prejudice to the claim expressed in Submission 7 in respect
of the damage to the social development of Nicaragua, in accordance with the
considerations set forth in paragraphs 355 to 372 of Chapter 6: a surn of not
less thanUS$2,000 million.
Ninth: In respect of the serious violations of the sovereignty of Nicaragua
specified in subparagraphs 5 and 6 of the operative part of the Judgment and
also in paragraph 251 of the Judgment: pecuniary satisfaction in the sum of
US$1,068,700,000.
Tenth: On the basis of the elements of affront to international public order
established in Chapter 8 of the present Memorial and the other principles350 MlLlTARY AND IJARAMILITARY ACTIVITIES

invoked therein: accessory compensation for moral damage in the sum of:

US$2,443,200,000.
494. B. ln the light of the continuing character of certain of the violations of
international law obligations for which the United States has been held respon-
sible. the Government of Nicaragua respectfully reserves the right to produce

further evidence of darnage, loss and injury flowing from such violations at the
stage of the oral hearings.
495. C. On the basis of the considerations set forth in paragraphs 477 to 482
of the concluding Chapter, the Government of Nicaragua respectfully requests
the Court :

EIev~izih:To award Nicaragua a sum as effectiveand completecompensation
for a11the damage that will be proved at the date of the Judgment (or of the
closure of the proceedings), whether or not such dümüge is caused by breaches
of international law extending in timeOF by acts not extending in time; and
Tirelfth:To maintüin the rights of Nicaragua to compensation for al1damage
which might occur as a result of these breaches having a continuing character,
and as a consequence to maintain the power to reopen the proceedings if and
when the circumstances generally and the interests ofjustice, in particular, make
such a course necessary.

496. D. On the basis of the considerations advanced in paragraphs 489 to 490
of the concluding Chapter, the Government of Nicaragua respectfully requests
the Court to :

Thirterntli:Offer indications on the precisz procedural implications of
Nicaragua's daim for costs.

497. E. The Court is requested to:
Foitrteenth: Include post-Judgment interest in the award of compensation
resulting from the present proceedings.

Respectfuily submitted,

(Signecl) Carlos ARG~ELL GOMEZ,
Agent for the Republic of
Nicaragua.

29 March 1988. LIST OF ANNEXES'

Annex I. Human Injuries, Material Damage and Production Losses
1.1. Affidavit of P. Oquist, National Director of DINFORS
1.2a. Danos humanos y materiales causados por la actividad contrarrevolu-
cionaria sobre Nicaragua
1.26. Human injuries and Material Damage Caused to Nicaragua by Counter-
revolutionary Açtivities
1.30. Metodologia del sistema computerizado de efectos causados pot" la
actividad contrarrevoluciona~a (DIAIDIS 041187)
1.3h. Methodology of the Computerized Systemon EtiectsCaused by Counter-

revolutionary Activity
1.4, Examples of Field Reports on Incidents of Counter-revolutionary Attack
(Form 1 in 1.3)
1.5, Example of Processing of FieldReports through the Computerized System
1.6. War Disabilities Due to Counter-revolutionary Attacks
an ne.^II. Economic Losses in incidents Cited in the ICJ Judgment

11.1.Affidavit from Leone1Arguello, President of INISER
11.2. Afidavit from H. Raudes, Technical Vice-President ofINISER
11.3a. Cuantificacion de los danos y gastos causados por ataques contrarrevo-
lucionarios a puertos nicaraguenses
II.3b. Quantification of the Damages and Expenses Caused by Counter-
revolutionary Attacks on Nicaraguan Ports
11.4.Original Valuation of the Damage Arising from the Attack on Ports

Annex III. Economic Losses Arising from the Trade Embargo
III.1. Affidavit of A. Martinez, Minister of Foreign Trade
111.2.Economic Losses to Nicaragua Caused by the US Trade Embargo

Annr.rIV. Macroeconomic and Developmental EfKectsof the Conflict
IV. 1.Affidavit of L. Elizondo, Vice-Minister of Planning
IV.2. Macroeconornic Consequences of Material Damage and Production

Losses
IV.3. Methodology of Macroeconomic Estimation
IV.4a. El modelo macroeconomico (ILPES) de Nicaragua
IV.4b. The ILPES Macroeconomic Model of Nicaragua
IV.5. The Loss of Social Development Potential
Annc.~ V. Excerpts of the 1987ECLAC Report on the Economy of Nicaragua

Annex VI, Summary of Economic Losses Caused by Counter-revolutionary
Activities
VI.1. Summary of Economic Damage

VI.2. The Calculation of the Present Value of Economic Losses

'Not reproduced. [Note by rhRegi.ytry.1352 MILITARYAND PARAMILITARYACTIVITES

Annex VII. The Economic Costs of Defenceto Nicaragua
VII.l. AfIidavitby W. Hupper, Minister of Finance

VII.2a. Gastos presupuestarios para defensa y seguridad 1980-87
VII.2b. Budgetary Expenditure on Defenceand Security 1980-87
Annex VIII. Expenditureby the USAdministration on Military and Paramilitary
Activitiesin and against Nicaragua

Annex IX. Official Documents Relating to the Trade Embargo and Loss of
Development Potential
IX.l. US ExecutiveOrder, 1May 1985(embargo)

IX.2. US ExecutiveOrder, 7 November 1985(prorogation of the embargo)
1X.3. US Department of the Treasury, Ofhce of Foreign Assets Control,
ExecutiveOrder, 8 May 1985
1X.4. Proclamation No. 4941 of the President of the United States (sugar
quota), 5 May 1982
IX.5. GA'IT,Report of the Panel, Irnports of Sugarftom Nicaragua (L/5607,
2 March 1984)
1X.6. GATT, Report of the Panel, "United States: Trade Measures Affecting
Nicaragua". 13October 1986,LI6053
IX.7. Central American Historical Institute, Upducre, February 1988

Annex X Chronological Statement of Evidence Relating to Continued US
Military and Paramilitary Activitiesin and against Nicaragua, 1981-1988
Artachrnentsto Annex X

A. S. Rept. No. 100-216,"Report of the Congressional Committee Inves-
tigating the Iran-Contra Affair" (excerpts)
B. Report of the President's Special ReviBoard ("Tower Commission"),
26 February 1987(excerpts)
C. Documents Releasedby the CongressionalCornmittees Investigatingthe
Iran-Contra Affair(selecteddocuments)
D. Transcripts of Hearings before the Congressional Comrnittees
Investigating the Iran-Contra Afiir (excerpts)
E. United States Statutes
F. United States Congressional Reports and Debates
G. Statements of United States President Ronald Reagan and Senior
Officiaisof His Administration
H. Report of the United States General Accounting Office, "Central
America:Problems in ControllingFunds for the Nicaraguan Democratic
Resistance", December1986
1. Press Disclosures
J. Nicaraguan Government Recordsof Militaryand Paramilitary Activities
in and against Nicaragua, 1986-1987

Annex XI. Documentation Relating to Nicaragua's 1918 Payment of lndem-
nification for Deaths of Two US Citizens

AnnexXII. Correspondence betweenNicaragua and the United Statesconcerning
the Compensation Phase of the Case