INTERNATIONAL COURT OF JUSTICE Principality of
Liechtenstein
Special Commissioner
and Agent for the case
brought before the
International
Court of Justice
CASE CONCERNING CERTAIN PROPERTY
(LIECHTENSTEIN v. GERMANY)
MEMORIAL
OF
THE PRINCIPALITY OF LIECHTENSTEIN
28 MARCH 2002 - 2-
TABLE OFCONTENTS
INTRODUCTION ....................................................................7...
..................................
A. Liechtenstein's application .....................................................8..................
..........
B. Background to the dispute........................................................9...............
...........
C. The dispute between Liechtenstein and Germany ............................................
D. Jurisdiction of the Court and admissibility of Liechtenstein's Application .....14
E. Structure of this Memorial .....................................................lS.................
........
PART ONE FACTUALBACKGROUND ................................................................. l7
CHAPTER 1 LIECHTENSTEIN AND LIECHTENSTEIN PROPERTY ....l8
A. The position of Liechtenstein in and after World War II.................................. 19
B. Seizure of the property of Liechtenstein nationals under the "BeneS
Decrees"......................................................................22
....................................
C. The Pieter-van-Laer case ......................................................29................
..........
CHAPTER2 THE POST-WARREPARATIONS REGIME ......................... 33
A. Introduction ..................................................................34....
...............................
B. The measures taken by the Allied and Associated Powers ............................... 34
1. TheYaltaProtocolofll Februaryl945 ................................................... 35
2. The Potsdam Protocol of2 August 1945 ................................................... 36
3. The Paris Agreement of 14 January 1946.................................................. 37 - 3 -
C. Implementation ofthe agreements of the Allied and Associated Powers ......... 39
1. Law No. 5 of the Control Council of30 October 1945 ............................ .40
2. Law No. 63 of the Council of the Allied High Commission of
31 August 1951 ...................................................................42...
..................
D. The Settlement Convention of26 May 1952 .................................................... 44
E. Further development of the Settlement Convention ......................................... 49
1. The Treaty on the Final Settlement with respect to German y of
12 September 1990 (Two-P1us-Four-Treaty) ............................................. 49
2. The Exchange of Notes of27 and 28 September 1990.............................. 50
CHAPTER 3 GERMANY'S CHANGE OF POS!T!ON .................................. 53
A. Introduction ........................................................................
............................... 54
B. Germany's former position ...............................................................55.......
........
1. German y regarded seizure of German external assets as unlawful .......... 55
2. Germany acknowledged the reparation measures only as a fact
and did not recognize them ........................................................57..............
C. Germany's position after amendments of the Settlement Convention ............. 62
1. The decisions of the German Civil Courts in the Pieter-van-Laer case ....63
2. The Decision of the Bundesverfassungsgericht (Federal Constitutîonal
Court) of 14 January 1998 .........................................................67.............
.
3. Statements of the Municipality of Cologne ............................................... 69
4. Statements of the German Government before the European Court of
Human Rights ......................................................................72
....................
5. Diplomatie correspondence and bilateral consultations ............................ 74
D. Decision to submit the dispute to the Court ...................................................... 85 -4-
PART TWO THE CLAIMS OF LIECHTENSTEIN ............................................... 86
CHAPTER 4 GERMANY'S FAJLURE TO RESPECT LJECHTENSTEIN'S
NEUTRALITY AND SOVEREIGNJTY ................................... 87
A. Overview ........................................................................
................................ 88
B. Liechtenstein was a neutra} State in World War II ........................................... 90
C. The law ofneutrality ........................................................................
................. 91
D. Gerrnany's violation of the law of neutrality ..................................................... 98
E. The breach of the duty to respect the neutra} character of Liechtenstein and
of Liechtenstein nationals gives rise to a claim of the neutral State ............... 101
F. Germany's failure to respect Liechtenstein's sovereignty ............................... 102
1. Germany may not treat Liechtenstein nationals as its own nationals
for reparation purposes ..................................................104...................
....
2. The treatment by Germany of Liechtenstein nationals amounts,
pro tanta, to an unlawful involuntary defacto naturalization ................. !06
CHAPTER 5 GERMANY'S OBLIGATIONS OF COMPENSATION FOR
PROPERTY BROUGHT WITHIN THE REPARATIONS
REGIME ........................................................................
............. !09
A. Germany's interference with Liechtenstein property rights ............................ 110
1. The Settlement Convention does not relate to Liechtenstein property ....110
(a) Interpretation according to the ordinary meaning .................................... 113
(b) Interpretation according to the context, object and purpose of the
Settlement Convention .....................................................115................
.....
2. Interference with property rights ............................................................. 119 - 5 -
B. Failure to compensate Liechtenstein notwithstanding its inclusion within
the reparations regime ...............................................................126......
.............
1. The regime of Articles 3 and 5 ofChapter Six of the Settlement
Convention ......................................................................126.......................
2. Duty of German y to compensate victims of reparation measures ........... 127
CHAPTER 6 UNJUST ENRICHMENT AND GERMANY'S CHANGE
OF POSITION ............................................................140.........
....
A. Introduction and overview .............................................................141........
......
B. Germany's unjust enrichment at Liechtenstein's expense ............................... 142
1. The princip le ofunjust enrichrnent (enrichissement sans cause) in
international law................................................................142.....
...............
(a) Unjust enrichment as a general princip le oflaw ...................................... 142
(i) Domestic legal systems recognîze unjust enrichment as basis for
compensation or restitution ............................................143................
(ii) The principle is transposable to international law ............................ 148
(b) The principle ofunjust enrichment has been incorporated into
international law........................................................................
...............
(i) Unjust enrichment as a basic principle of international law ............. 150
(ii) Unjust enrichment as a cause of action ............................................. 152
(c) The content of the princip le ofunjust enrichment. .................................. 154
2. Unjust emichment of Gennany through the inclusion of the
Liechtenstein property within the reparations regime .............................. 155
(a) Germany's enrichment .............................................................155........
.....
(i) The debt and the debtor ....................................................155.............
(ii) The enrichment .............................................................156........
.........
(b) Liechtenstein's correlative impoverishment.. ........................................... - 6 -
(c) The link between Germany's enrichment and Liechtenstein's
impoverislunent. ............................................................159.........
...............
(d) The absence oflegal cause or justification ............................................... 161
C. Germany's unjustified change of position to Liechtenstein's detriment.. ........ 162
1. Equitable claims based on a detrimental and unjustified change of
position: in principle ......................................................162...............
........
2. The princip le applied to the present case ................................................. 167
(a) The initial position of Germany and Liechtenstein conceming property
seized under the "BeneS Decrees" ............................................................ 167
(b) Germany's consequent refusai to compensate victims of the "BeneS
Decrees" in the context of the reparations regime ................................... 168
(c) Germany's unwarranted change of position after 1990............................ 168
(d) The detriment to Liechtenstein arising from Germany's change of
position ....................................................................173.
.............................
D. Conclusion ........................................................................174............................
CHAPTER 7 LEGAL CONSEQUENCES OF GERMANY'S CONDUCT
TOW ARDS LIECHTENSTEIN ............................................... 175
A. Germany's obligations of cessation and reparation (including
compensation) ....................................................................176.
.........................
B. The remediai situation .............................................................178........
.............
1. Declaratory relief ..........................................................179...........
.............
2. Cessation and assurances and guarantees of non-repetition .................... 180
3. Reparation and, in particular, compensation ............................................ l82
4. Conclusion ..................................................................185...
.......................
CONCLUSION AND SUBM!SS!ONS .........................................................186..........
LIST OF ANNEXES ........................................................................
...188..................... - 8-
A. Liechtenstein's application
1. On 30 May 2001, Liechtenstein lodged its Application instituting proceedings
in the name of the Principality of Liechtenstein (hereafter "Liechtenstein")
against the Federal Republic of Germany (hereafter "Germany"). The dispute
thereby brought to the Court concerns a decision by Germany to treat certain
property of Liechtenstein nationals (hereafter the "Liechtenstein property") as
having been "seized fbr the purpose of reparation or restitution, or as a result of
the state ofwar", without ensuring any compensation for the loss ofthat prop
erty toits Liechtenstein owners, and to the detriment of Liechtenstein itself.
2. The property in question includes substantial arable land and forests, numer
ous buildings and their contents, factories etc. It was seized by Czechoslovakia
in 1945 under the "BeneS Decrees", on the basis that its owners were "Ger
man". About 38 Liechtenstein nationals were affected as owners of the prop
erty, including the then Prince of Liechtenstein and members of his family. In
fact at no time were the owners of the property concemed German nationals.
3. Beginning in 1995, Germany bas classified ali the Liechtenstein property as
having been "seized for the purpose of reparation or restitution, or as a result of
the state of war", within the meaning of Article 3 of Chapter Six of the Con
vention on the SeUlement of MaUers arising out of the War and the Occupa
tion, signed at Bonn on 26 May 1952 (hereafter the "SeUlement Convention")
1
(Annex 16). It has done so by a combination of decisions of its courts and
statements by Ministers and officiais.
United Nations Treaty Series, No. 4762. The Settlement Convention was amended by Schedule
IV to the Protocol on the Termination of the Occupation Regime in the Federal Republic of
Gennany, Paris, 23 October 1954: United Nations Treaty Series, No. 4758. - 9-
4. By virtue of this conduct, Germany bas thereby
(a) failed to respect the sovereignty and neutrality of Liechtenstein, and bas
committed other breaches of international law as specified in this Memo
rial, and
(b) in consequence of its acts, is Iiable to compensate Liechtenstein for the
injury and damage suffered.
5. By arder of 28 June 2001, the Court laid dawn the timetable for the proceed
ings, with Liechtenstein to file its Memorial by 28 March 2002. This Memorial
is filed in accordance with that Order.
B. Background to the dispute
6. During World War II, Liechtenstein was a neutral State. lts neutrality was gen
erally recognized, including by Germany.
7. In 1945, Czechoslovakîa through a series of decrees (hereafter the "BeneS De
crees") seized property located on its territory. Czechoslovakia applied those
decrees not only to German nationals but also to other persans allegedly be
longîng to the German "people", includîng to nationals of Liechtenstein. How
ever, the present case does not deal wîth Liechtenstein's daims against the
Czech Republic, but only concerns claims against Germany arising from Ger
many's own conduct in and after 1995.
8. Questions of title to property seized in time of war, and of compensation for
such seizure, cannat be determined unîlaterally but must be the subject of
agreement between the parties concemed, either in a final peace treaty or oth
erwise. No final peace treaty was ever concluded in the aftermath of World
War II between Germany and the Allied Powers. But the question of repara- - 10-
tiens and compensation for seizures was regulated by agreement. Of particular
importance so far as Germany was concerned was the SeUlement Convention
(Annex 16). Chapter Six of that Convention deals wîth reparations. In accor
dance with Article 3 (1) ofChapter Six, Germany agreed that it would ...
"in the future raise no objections against the measures which have
been, or will be, carried out with regard to German external assets
or ether property, seized for the purpose of reparation or restitution,
or as a resultof the state of war, or on the basis of agreements con
cluded, or to be concluded, by the Three Powers with ether Allied
countries, neutral countries or former alliesof Germany."
By Article 3 (3), it further agreed that:
"No claim or action shall be admissible against persans who shall
have acquired or transferred title to property on the basis of the
measures referred to in paragraph 1... of this Article, or against in
ternational organizations, foreign governments or persons who
have acted upon instructions of such organizations or govem
ments."
By Article 5 German y further agreed that:
"The Federal Republic shall ensure that the former owners of prop
erty seized pursuant to the measures referred to in Articles 2 and 3
of this Chapter shall be compensated."
9. There was thus created a special regime with respect to property seized for the
purpose of reparation. Property falling within that regime is specifically af
fected in that Germany is obliged to raise no objections to the seizure, to bar
actions (including actions in its own courts) against persons, organizations or
govemments in possession of such property, and thus to recognise the title of
those persons. As a corollary of the regime, Germany undertook to compensate
"the former owners of property seized".
1O. Subsequent to the conclusion of the Settlement Convention, German y and
Liechtenstein both proceeded on the basis that the Liechtenstein property did - 11 -
not fall within the regime of the Convention. It was understood that the prop
erty was not "property, seized for the purpose of reparation or restitution, or as
a result of the state of war" within the meaning of Article 3 (1) of the Conven
tion. As a corollary, Germany maintained the position that property falling out
side the scope of the Convention was unlawfully seized, that the German courts
were entitled to consider claims affecting such property, and that no question
of compensation to the "former owners" of such property under Article 5 arase.
11. Article 1 (1) of Chapter Six of the Settlement Convention provided that the
problem of reparation was to be "settled by the peace treaty between Gennany
and its former enemies or by earlier agreements concerning this matter". The
subsequent provisions of the Convention were to apply "[P]ending the final set
tlement envisaged in paragraph 1 of this Article". When that final settlement
2
occurred, as a result of a series of agreements in 1990, key provisions of the
Settlement Convention remained in force by virtue of an Exchange of Notes
between the parties to that Convention. The provisions which remained in force
included, in particular, Articles 3 (1) and (3) of Chapter Six of the Settlement
Convention. 3 By contrast Article 5 of Chapter Six of the Settlement Conven
tion was terminated. Thus German y continued -and continues - to be under the
obligations of the Settlement Convention with respect to property "seized for
the purpose of reparation or restitution, or as a result of the state of war". The
only reason why no further compensation arrangements were envisaged under
Article 5 was that these had already been made. According to Germany's un
derstanding, in 1990, there was no further property which was covered by the
regime of the Settlement Convention but the seizure of which had not been
See Federal Republic of Gerrnany, German Democratie Republic, France, Union of Soviet So
cialist Republics, United Kingdom, United States, Treaty on the Final Settlement with respect to
Germany, Moscow, 12 September 1990, United Nations Treaty Series, No. 29226, Federal Law
Gazette(Bundesgesetzblatt) 1990 II, p. 1318.
France, Federal Republic ofGerrnany, United Kingdom, United States, Exchange of Notes con
cerning the Relations Convention and the Settlement Convention, Bonn, 28 September 1990,
United Nations Treaty Series, No. 28492; Federal Law Gazette (Bundesgesetzblatt) 1990 II p.
1386. - 12-
cornpensated for. On any ether basis, the deletion of Article 5 would have im
plied a breach of international law, since it would have left uncompensated by
German y those nationals of third States whose property had been "seized for
the purpose of reparation or restitution, or as a result of the state of war". With
respect to any such property, Germany would have been in the position of
treating itas subject to the regime of war reparations without any form of com
pensation to the dispossessed owners.
12. Even after the amendments made to the Settlement Convention in 1990, Ger
many continued to take the position that the Convention did not caver the
Liechtenstein property, which had not been "seized for the purpose of repara
tion or restitution, or as a result of the state of war". Thus Germany continued
to recognize the sovereignty and neutrality of Liechtenstein and that the clairns
of the owners of the Liechtenstein property rernained open. In a letter to the
Reigning Prince of Liechtenstein, the German Chancellor, Mr. Kohl, said that
the Declaration, then under negotiation, "leaves open legal questions in con
nection with expropriations in the then Czechoslovakia" (Annex 40).
C. The dispute between Liechtenstein and Germany
13. In the years after 1995, the position of the Federal Republic of Germany
changed, as a result of decisions of its courts, and ultimately of the Federal
Constitutional Court of 28 January 1998, and of the adoption and extension of
the court decisions by the Govemment of Gerrnany. These decisions concerned
a painting 4 which was among the Liechtenstein property seized in 1945, and
which was in the possession of the Historie Monuments Office in Brno, Czech
Republic, a State entity of the Czech Republic. It was brought to Germany for
the purpose of an exhibition, and thus carne into the possession of the Munici
pality of Cologne. At ille request of the Reigning Prince, Prince Hans-Adam II,
The painting, by Pieter van Laer, is entitled "Szene um einen rômischen Kalkofen". It was part of
the Princely family collection since the 18thcentury. It is not State property of Liechtenstein. - 13 -
acting in his private capacity, the painting was seized pending determination of
the claim. Eventually, however, the claim failed, the Federal Constitutional
Court holding that the German courts were required by Article 3 of Chapter Six
of the Settlement Convention to treat the painting as the property of the His
torie Monuments Office, and not to entertain the claimant's demand. In par
ticular it held that the painting was to be treated as property "seized for the
pm-pose of reparation or restitution, or as a result of the state ofwar" within the
meaning of Article 3. Accordingly the painting was released and retumed to
the Czech Republic. The decision of the Federal Constitutional Court is final
and without appeal. [t is attributable to Gennany as a matter of international
law and is binding upon Germany as a matter of German law.
14. Following the decision, Liechtenstein protested to Germany that the latter was
treating assets which belonged to citizens of Liechtenstein as German assets, to
the detriment of Liechtenstein and of its nationals. Germany rejected this pro
test. In subsequent consultations it became clear that Germany now adheres to
the position that the Liechtenstein assets as a whole were "seized for the pur
pose of reparation or restitution, or as a result of the state ofwar", even though
the decision of the Federal Constitutional Court only concemed a single item.
In taking this position German y ignores and undermines the rights of Liechten
stein and its nationals in relation to the Liechtenstein property as a whole, as
weil as failing to respect the sovereignty and neutrality of Liechtenstein itself.
15. Thereupon the Reigning Prince of Liechtenstein, acting in his persona! capac
ity, commenced proceedings before the European Court of Human Rights. The
case between the Reigning Prince and the Federal Republic of Germany con
cemed only the Pieter-van-Laer painting, and was based on Article 6 (1) and
Article 14 of the European Convention of Human Rights, as weil as Article 1 - 14 -
of the First Protocol to that Convention. The Application was rejected by the
5
European Court.
16. The question before this Court in the present case does not concem individual
human rights under the European Convention on Human Rights, but rather the
rights of Liechtenstein as a State and its nationals under general international
law and in relation to the post-war reparations regime. In particular the ques
tion is whether in its treatment of the Liechtenstein property in and after 1995,
Gennany bas acted consistent!y with its obligations to Liechtenstein under in
ternational law. Germany denies that it bas committed any breach of interna
tional law, and thus claims that it is entitled to treat the Liechtenstein property
as property "seized for the purpose of reparation or restitution, or as a result of
the state of war". It further denies that it bas any obligation to Liechtenstein to
compensate it in respect of its conduct in that regard, orto make reparation for
injury suffered by Liechtenstein as a result of the change in Germany's legal
position. There is accordingly a legal dispute between Liechtenstein and Ger
many. It is this dispute which is the subject of the present Application.
D. Jurisdiction of the Court and admissibility of
Liechtenstein's Application
17. In accordance with Article 36 (1) of the Statute of the International Court of
Justice, the jurisdiction of the Court arises under Article 1 of the European
Convention for the Peaceful Settlement of Disputes of29 April1957 (hereafter
"the Convention"). 6 8oth Liechtenstein and Germany are parties to the Con
vention without reservation. The Convention entered into force as between the
two States on 18 February 1980.
Judgment of the European Court ofHuman Rights of 12 July 2001, Appl. No. 42527/98.
United Nations Treaty Series, No. 4646. - 15 -
18. The dispute between the parties is admissible Wider the Convention. Article
27 of the Convention provides that:
"The provisions of this Convention shall not apply to:
(a) disputes relating to facts or situations prier to the entry into
force of this Convention as between the parties to the dispute;
(b) disputes which by international law are solely within the
domestic jurisdiction of States."
The present dispute arises from and concems conduct of German courts and of
ficiais in and a:fter 1995. It concems the effect of the post-war reparations re
gime and is not sole!y within the domestic jurisdiction ofGennany under inter
nationallaw.
19. To the extent that the dispute concerns "a decision with final effect" of the
German courts, the decision in question was that of the Federal Constitutional
'Courtof 28 January 1998. The present proceedings are brought within the 5-
year time limit laid down by Article 29 of the Convention.
20. This Court accordingly bas jurisdiction over the dispute, and the present pro
ceedings are admissible under the Convention.
E. Structure of this Memorial
21. This Memorial is in two Parts. Part One sets out the factual background in
three chapters. Chapter 1 presents Liechtenstein's neutrality in World War II,
and describes the fate of the Liechtenstein property in Czechoslovakia and,
much later, of the Pieter-van-Laer painting before the German courts. Chapter
~ details the development of the post-war reparations regime and in particular
the scope of the Settlement Convention. Chapter 3 shows how Germany's posi- - 16-
tion changed vis-à-vis Liechtenstein in the years after the final amendment of
the Settlement Convention in 1990.
22. Part Two specifies Liechtenstein's claims under three headings, and sets out
the remediai consequences of those claims. Chaoter 4 concerns Germany's fail
ure, in and after 1995, to respect the sovereignty and neutrality of Liechten
stein, specificallyby treating its property as "seized for the purpose of repara
tion or restitution,or as a result of the state of war". Chapter 5 concems Ger
many's failure to respect the rights and interests of Liechtenstein nationals in
their property, specifically by treating such property as incorporated in the
reparations regime. Chapter 6 concerns Liechtenstein's claims based on Ger
many's unjust enrichment (enrichissement sans cause), and on its unwarranted
change of position in and after 1995, causing detriment to Liechtenstein and îts
nationals. Chapter 7 deals with the legal consequences of these breaches in
terms of the declaratory and ether relief to which Liechtenstein is correspond
ingly entitled. There follow Liechtenstein's conclusions and submissions, and a
listof the 47 annexes to this Memorial, which are contained in three separate
volumes. - 17 -
PARTONE
FACTUALBACKGROUND
f - 18-
CHAPTERl
LIECHTENSTEIN AND LIECHTENSTEIN PROPERTY - 19-
A. The position of Liechtenstein in and after World War II
1.1 As a small sovereign European State, the Principality of Liechtenstein found it
self in a precarious situation on the eve of World War II. Close to Germany,
Austria and Switzerland, Liechtenstein bad maintained its neutral status since
1806 and continued to concentrate its foreign policy on a preservation of this
State in the period after Hitler's seizure of power in the German Reich. Against
the backdrop of the expansionism of the German Reich, this was a difficult, but
eventually successful balancing act.
1.2 Liechtenstein - unlike almost ali other European States - never recognised the
extinction of Czechoslovakia following the Munich Agreement of 29 Septem
ber 1938, by which Germany, Italy, France and Great Britain agreed on the
cession of the hitherto Czechoslovakian Sudetenland to the German Reich. De
spite having adopted this independent position, Liechtenstein's skilful diplo
matie endeavours succeeded in gaining recognition of its neutral status even by
Germany.
1.3 On 30 August 1939 - one week after the non-aggression treaty between Ger
many and the Soviet Union had been sealed by the German Foreign Minister
von Ribbentrop and the Soviet Foreign Minister Molotow in Moscow, and two
days before Hitler invaded Poland - the Liechtenstein Goverrunent proclaimed
on behalf of the then Reigning Prince of Liechtenstein that Liechtenstein would
maintain "strictest neutrality" in the eventof an outbreak of war. The task of
informing ali Powers that might be involved in a possible conflict of this deci
sion was assigned to the Political Department (Foreign Ministry) of the Swiss
Confederation. -20-
1.4 The Liechtenstein Govemment's note addressed to the Political Department of
the Swîss Confederation in Bem on 30 August 1939 (Annex 1) reads as fol
Iows:
"Seine Durch/aucht der regierende Fürst Franz Josef II von Liech
tenstein haben die fürstliche Regierung beauflragt, dem EidgenOs
sischen Politischen Departement in Bern zur Kenntnis zu bringen,
dass das Fürstentum im Falle eines kriegerischen Konjliktes die
strengste Neutralitiit bewahren wird.
Indem die jùrstliche Regierung bittet, von dieser Haltung des Für
stentums den an einem allflilligen Konjlikt beteiligten Miichten gü
tigst Kenntnis geben zu wollen, dankt sie im voraus für die allfii/li
ge Mühewaltung und benützt auch diesen Anlass, dem Eidgenbssi
schen Politischen Departemente erneut den Ausdruck vorzüglicher
Hochachtung auszusprechen."
Translation 7:
"His Serene Reigning Highness, Prince Franz Josef II of Liechten
stein, asked the Prince's Govemment to inform the Political De
partment of the Swiss Confederation in Bern that Liechtenstein will
maintain strictest neutrality in the eventof an outbreak of war.
The Prince's Government would like to ask you to kindly inform ali
Powers that might be involved in a possible conflict of the Princi
pality's attitude, and would also like to thank yeu in advance for
your effort involved in this respect. The Prince's Government avails
itselfof this opportunity to renew to the Political Department of the
Swiss Confederation the assurance of its high esteem and consid
eration."
1.5 The Swiss Ambassador Fr6licher handed over the Liechtenstein declaration of
neutrality together with the Swiss declaration of neutrality, dated 31 August
1939, to the German State Secretary Weizsâcker at the Foreign Office at mid
day of 1 September 1939. As Frëlicher reported back to the Political Depart
ment of the Swiss Confederation, the German Reich committed itself to re
specting their neutrality. In the Copie de réceptionof 1 September 1939 (An
nex 2), the Ambassador Frëlicher states:
As not otherwise stated, ali translations have been prepared by Liechtenstein. - 21 -
"Auch Neutralitiitserkliirung Liechtenstein wurde in zustimmendem
Sinne entgegengenommen."
Translation:
"Liechtenstein's declaration of neutrality was similarly accepted in
an affirmative way."
France, Italy and United Kingdom, made declarations to similar effect.
1.6 In a note dated 1 September 1939 and addressed to the Swiss Ambassador in
London, Charles Paravicini, the Foreign Office of the United Kingdom, stated
as follows (Annex 3):
"1have the honour to acknowledge the receipt of your note of the
31st August in which you conveyed to me the text of a declaration
by His Serene Highness the Prince of Liechtenstein affirming that
in the event of the outbreak ofwar the Principality of Liechtenstein
will maintain the strictest neutrality.
2. I shall be glad if you will cause His Serene Highness to be in
fonned that His Majesty's Govemment in the United Kingdom
have taken due note of this communication.
3. His Serene Hîghness may rest assured that if in the event of a
European war, Liechtenstein adopts an attitude of neutrality, His
Majesty's Govemment in the United Kingdom will, in accordance
with their traditional policy, be resolutely detennined to respect this
neutrality, provided that it is respected other Powers."
1.7 The Italian Ministry of Foreign Affairs made a statement to the same effect in a
note addressed to the Swiss Ambassador in Rome, Paul Ruegger, on 4 Septem-
ber 1939 (Annex 4):
"Ho l'onore di segnare ricevuta della Vostra Nota in data 1°
settembre, relativa alla dichiarazione di neutralità del Principato
di Liechtenstein. - 22-
Nell'informarVi che il Governo Fascista ha preso atto di tale
comunicazione, Vi porgo, Signor Ministro, gli alti della mia alta
considerazione."
Translation:
"I have the honour to acknowledge receipt of your note dated 1
September conceming the declaration of neutrality of the Principal
ity of Liechtenstein.
I may inform you that the Fascist Government bas taken note of
such communication and may assure you, Mr. Ambassador, of my
highest consideration."
1.8 In the narne of the French Republic, the French Foreign Ministry declared in a
note dated 10 September 1939 and addressed to the Swiss Embassy in Paris
(Annex 5):
"A la date du 1er septembre 1939, la Légation de Suisse a bien
voulu faire part au Ministère des Affaires Etrangères d'une déci
sion prise par Son Altesse Sérémissimele Prince régnantde Liech~
tenstein, et aux termes de laquelle, en cas de conflit armé,la Prin
cipautéde Liechtenstein observera la plus stricte neutralité.
Le Ministère des Affaires Etrangères a l'honneur d'accuser récep
tionà la Légationde Suisse de sa communication."
1.9 Liechtenstein neutrality was never challenged thereafter, and for the duration
of the War.
B. Seizure of the property of Liechtenstein nationals
onder the "BeneS Decrees"
1.10 At the end of World War II, in 1945, the former Czechoslovakian President
Eduard BeneS retumed to Prague from his exile in London. Apart from recon
structing the State of Czechoslovakia which had been destroyed by Hitler
German y, his primary goal was to free his country of German and Hungarian
minorities living there. This policy led to the expulsionof more than 2.5 mil- -23-
lion persans belongîng to the German and Hungarian "people" from Czecho
slovakia and to the seîzure oftheir property without any compensation.
1.11 The legal mechanism to achieve this purpose in relation to the property of
German and Hungarian minorities were so-called presidential decrees, the
"BeneSDecrees". Of particular importance were Decrees No. 12 and No. 108.
1.12 Decree No. 12 of21 June 1945 (Annex 6) concerned the confiscation and ac
celerated allocation of agricultural property owned by Germans, Hungarians
and also by people who have committed treason and acted as enemies of the
Czech and Slovak people. The aims ofDecree No. 12 were described in the
Preamble as follows:
"Vychtizeje vstfic voldni éeskfch a slovenskfch rolnikû a bezzemkû
po dilslednémuskuticneni novépozemkovéreformy a veden snahou
pfedev.Simjednou pro vidy vziti éeskoua slovenskou pUdu z rukou
cizcickfch némeckjch a mad 'arskjch statkizfU, jakoi i z rukou
zrizdcUrepubliky a dcitiji do rukou éeskéhoa slovenského rolnictva
a bezzemk:U,k ncivrhuvlézdyustanovuji:"
Translation:
"In order to accommodate Czech and Slovak peasants and people
who do not own any land and cali for a consistent implementation
of a new land reform, and in particular guided by the intention to
take Czech and Slovak land once and for ail out of the bands of
foreign German and Hungarian landowners and also out of the
hands of traitors of the Republic, and in order to give it into the
bands of the Czech and Slovak peasantry and people not owning
any land, I hereby order upon the government's proposai:"
1.13 On the basis of Decree No. 12 ali agricultural property of persons regarded as
belonging to the German and Hungarian "people" was confiscated. Section 1
(1) ofDecree No. 12 provides:
' Offizial Gazette of the Czechoslovakian State, 23 Jupp.17 et seq. - 24-
"§ 1
(1) S okamiitou platnosti a bez mihrady se konfiskuje pro Uéely
pozemkovêreformy zemedelskj majetek, jeni je ve vlastnictvi:
a) vSech osob nlmeckéa mad'arskéncirodnosti,bez ohledu na
sttitni pfisluSnost,
b) znidcit a nepfdtel republiky jakékoliv nârodnosti a stiztni
pfisluSnosti, projeviv§ich toto nepfâtelstvi zejména za krise a vâlky
v letech 1938 ai 1945,"
Translation:
"§ 1
(1) For the purposes of land reform, agricultural property owned
by the following persans is confiscated with immediate effect and
without compensation:
a) all persons belonging to the German and Hungarian people,
regardlessoftheir nationality
b) persans who have committed treason and acted as enemies of
the Republic, regardless of their nationality, and who have shown
their hostilîty in particular during the yearscrisis and the war be
tween 1938 and 1945."
1.14 Section 2 ofDecree No. 12 contains a definition ofpersons who were regarded
as belonging to the German or Hungarian "people":
"§2
(1) Za osoby ncirodnosti nemecké nebo mad'arské jest
povaiovati osoby, kterépfi kterémkoliv sCitcinilidu od roku 1929 se
pfihlcisily k nemecké nebo mad'arské ndrodnosti nebo se staly
Clenyncirodnîch skupin nebo UtvarUnebo politicJo/ch stran, sdruiu
jicich osoby nemeckénebo mad'arkséntirodnosti.
(2) Vjjimky z ustanoveni odstavce 1 budou urCeny zvlci§tnim dek-
retem."
Translation:
"§2
(1) Those persons are considered to belong to the German or
Hungarian people who declared on the occasion of every census
since the year 1929 that they belonged to the German or Hungarian
people, or who have become members of national groups or politi- - 25-
cal parties made up of persans belonging to the German or Hungar
ian people.
(2) Exceptions to the provisions ofparagraph 1 will be laid down
in a separate Decree."
1.15 The assets subject to confiscation in accordance with Decree No. 12 were very
broadly defined. Contrary to the terms of the preamble, they included not only
agricultural property in the narrow sense, but the Decree and in particular the
implementing provisions issued in relation thereto covered practicallyli kinds
of assets, even though they were in no way related to agricultural business.
Section 4 and Section 7 (4) ofDecree No. 12 state:
"§4
Zemedelskfm majetkem (~ 1, odst. 1)}est rozumeti zemedelskou a
lesni pUdu, k ni patfici budovy a zafizeni, z6vody zemedelského
prUmyslu, slouiici vlastnimu zemédélskémua lesnimu hospodcif
stvi, jakoi i movitépfiS!uSenstvi (iü:Ya mrtvj inventcif) a v.Sechna
prciva, kterci)sou spojena s dribou zkonfiskovaného majetku anebo
jeho écisti."
Translation:
"§ 4
Agricultural property [§ 1 (!)] means agricultural and forest land
which also comprises buildings and installations pertaining thereto,
agricultural industrial undertakings used for the owner's agricul
turaJ and forestry activities, as weil as movable property pertaining
thereto (livestock and equipment) and ali rights related to the con
fiscated propertyor part thereof."
"§ 7
(4) Konfiskované budovy, zafizeni, slouiici vlastnimu zemedel
skému nebo lesnimu hospodcifstvi, zizvody zemèdèlskeho prUmyslu,
sady, pamcitnosti, archivy a pod., jakoi i v.Sechny konfiskované
nemovitosti, pokud nebudou pfidileny vefejnoprilvnim subjektUm,
mohou se pfidéliti do vlastnictvi:"
Translation:
"§ 7
(4) Confiscated buildings, facilities serving for actual agricultural
or forest management, forest industry enterprises, orchards, monu
ments, archives, etc., as weil as the confiscated buildings, installa- -26-
tians used for the owner's agricultural or forestry activities, agricul
tural îndustrial undertakings, gardens, memorabilia, archives, etc,
as weil as ali confiscated real property unless donated to public en
tities may be allocated to the ownership of:"
1.16 In addition Decree No. 108 of25 October 1945 (Annex 7) regarding the Con
fiscation of Enemy Property and the National Reconstruction Fund deals with
the confiscation of non-agricultural property owned by persans belonging to
the German or Hungarian people. Section 1 of Decree No. 108 reads as fol
lows:
"§ 1 Vymezeni konfiskovaného majetku
(1) Konfiskuje se bez ntihrady - pokud se tak }ii nestalo - pro
Ceskoslovenskou republiku majetek nemovitf i movitj, zejména i
majetkowi prciva (jako pohledcivky, cenné papiry, vklady, prtiva
nehmotnti), kterf ke dni faktického skonCeni nemeckéa mad'arské
okupace byl neho}eSte}est ve vlastnictvi:
1. Nemeckéfi§e, Krfzlovstvi mad'arského,osob vefejnéhoprfzva
podle nemeckéhonebo mad'arskéhoprfzva, nemeckéstrany nacis
tické, politickjch stran mad 'arskjch a jin;lch UtvarU,organisaci,
podnikU, zafizeni, osobnich sdruieni, fondU a UCelovfch }mini
tichto reiimü nebo s nimi souvisicich, jakoi i jinjch nemeckjch
nebo mad 'arsk;lchosob prtivnickjch, nebo
2. osob fysickjch ntirodnosti nemeckénebo mad'arské,s vjjim
kou osob, kteréprokizii, ie zUstalyverny éeskoslovenskérepublice,
nikdy se neprovinily proti ntirodüm Ceskémua slovenskémua bud'
se Cinne zûCastnily boje za jeji osvobozeni, nebo trpily pod nacis
tickjm nebofaSisticJcYmterorem, nebo"
Translation:
"§ 1 Scope of confiscated property
(1) Confiscation without compensation shall take effect- as far
as this has not been already done - to the benefit of the Czechoslo
vak Republic in respect of movable and imrnovable property, in
cluding in particular property rights (such as claims, securities, de
posits or contributed capital, intangible rights) which were owned
Official Gazette of the Czechoslovakian State, 25 October 1945, pp. 248 et seq. -27-
to this day of the actual termination of the German and Hungarian
occupation or have hitherto been owned by the following parties:
1. the German Reich, the Kingdom of Hungary, corporate bod
ies under German or Hungarian public law, the German Nazi Party,
the Hungarian political parties and associations of persans, organi
sations, companies, institutions, associations, funds and special
purpose funds of their regimes or cOimected with them, or other
German or Hungarian legal entities, or
2. natural persans belonging to the German or Hungarian people
ether than persans who can fumish proof that they remained faith
fui to the Czechoslovak Republic, have never acted to the detriment
of the Czech or Slovak people and either participated actively in
the fight for its liberation or suffered under Nazi or Fascist terrer,
or"
1.17 These Decrees No. 12 and No. 108 were not only applied to former Czechoslo
vakian citizens of German or Hungarian nationality or to citizens of the Ger
man Reich who lived in Czechoslovakia prior to 1938 (so-called Alt
reichsdeutsche), but also to citizens of the Principality of Liechtenstein.
1.18 When the State of Czechoslovakia came into existence in 1918, a nwnber of
Liechtenstein families bad lived in Bohemia and Moravia for several centuries.
Ali these families held only Liechtenstein citizenship, which has existed since
1806. As far as it is known, none of them also had German nationality. They
owned extensive agricultural and forestry property, bouses, livestock and
equipment used in agriculture, personal fumiture and fittings and ether valu
ables, asweil as interests in agricultural and industrial business. Ali Liechten
stein citizens were regarded by Czechoslovakia as persans belonging to the
German "people" and their entire property was confiscated without compensa
tionon the basis of the Decrees No. 12 and No. 108.
1.19 In 1945, the govemment of Liechtenstein drew up a list of families affected by
the confiscation measures of the then Czechoslovakian govemment (Annex 8). -28-
1.20 The confiscations affected in particular the family of the Head of State of the
Principality of Liechtenstein, the then Reigning Prince Franz Josef II of Liech
tenstein. The family of the Prince of Liechtenstein bas been resident in what is
today the territoryof the Czech Republic for more than 700 years and owned
large forests and agricultural lands. In addition, they owned several casties
which were home to an important artcollection.
1.21 By order of 30 July 1945, the Regional National Committee in Olomouc and
the National Committee in Brno confiscated the property of the princely family
situated in Czechoslovakia applying Decree No. 12 to the Reigning Prince
Franz Josefil of Liechtenstein and to ali members of his family. This confisca
tion was effected even though neîther he - nor any ether member of the
prince!y family or any ether Liechtenstein citizen - had ever declared on the
occasion of any census !hat they belonged to the German or Hungarian "peo
ple",neither was he- nor any ether Liechtenstein citizen - a member of apy or
ganizatîon consîstîng ofpersons belonging tc the German "people". The Reign
ing Prince was a citizen and the Head of State of an independent and neutral
State, thePrincipality of Liechtenstein.
1.22 The Reigning Prince filed ali possible appeals against the confiscation in ac
cordance with the then existing Czechoslovakian law. The final Court of Ap
peal, the Administrative Court in Bratislava, rejected his appeals and upheld
the decisions of the National Conunittee in a judgment dated 21 November
1951 (Annex 9). The Czechoslovakian Administrative Court held that
"Ve véci samé dospél Zalovanf Ufad k ztivéru, Za stéZovatelje
osobou némeckémirodnosti ve smyslu ustanoveni § 1 odst. 1 pism.
a) dekretu é. 1211945, Sb.na zdklade zjiSténi,ie u ncis bylo ajest
vScobecnézntimo, ie je némeckéncirodnosti." (page 3 of the judg
ment)
Translation:
"On the merits of the case, the defendant office has come to the
conclusion that the Appellant is a persan belonging to the German -29-
people within the meaning of the provisions of Section 1 (1) (a) of
the Decree No. 12/1945 Coll., on the grounds of the finding that
this has been and is of public knowledge here." (page 4 of the
translation)
1.23 Neîther the judgment nor the relevant Czechoslovakian measures against
Liechtenstein property were recognised by Germany over the next 40 years un
til 1995. Iwas only in the context of the Pieter-van-Laer case, when a Liech
tenstein itemof property was brought to German tenitory, that Germany first
changed its position vis-à-vis Liechtenstein.
C. The Pieter-van-Laer case
1.24 From 28 August to 17 November 1991, the Wallraf-Richartz-Museum of the
Municipality of Cologne staged a large exhibition featuring Dutch painters of
the 17th century who were influenced by Italian painting. The exhibition was
entitled "J Bamboccianti - niederliindische Malerrebellen im Rom des Barock"
(The Bamboccianti - Dutch rebel painters in Rome during the Baroque period).
When Dr. Reinhold Baumstark, then Curator of the private art collection of the
present Reigning Prince Hans-Adam II of Liechtenstein and today the Director
General of the Bavarian Museums, visited the exhibition, he made an unex
pected discovery. There was a painting listed under catalogue number 19.12
entit1ed "Szene um einen rOmischen Kalkofen" ("Scene set around a Roman
lime kîln") painted by Pieter van Laer, the most prominent Dutch member of
the so-called Bamboccianti group of painters. This painting was described in
the catalogue as follows:
"19.12 Szene um einen rOmischenKalkofen
61 auf Leinwand
51,5 x 69,2 cm
Valtice (Feldsberg), Schloj3
CSFR
Inv. Nr. 724/597
Herkunft: Aus der Sammlung des Fürsten von Liechtenstein." - 30-
Translation:
"19.12. Scene set around a Roman lime kiln
Oil on canvas
51.5 x 69.2cm
Valtice (Feldsberg), castle
CSRF
Inv. No. 724/597
(Provenance: Collection of the Prince of Liechtenstein)"
The catalogue entry also explained that the painting, which had been part of the
Prince of Liechtenstein's collection Iocated at Feldsberg Castle, had been "re
discovered in 1981" after it "had been considered lost for many decades".
1.25 When the painting was examined more closely at the exhibition, a label of the
Liechtenstein Gallery in Vienna was detected on the back of the canvas bearing
the number 669; there was a further label with numbers relating to Feldsberg
Castle, namely abject No. 170, inventory No. 129.
1.26 On his return to Vaduz, Dr. Bamnstark started his research into the history of
this painting. He discovered that the painting had been the subject of a private
acquisition by the Prince of Liechtenstein prior to 1712 and since 1888 the
painting had been at Feldsberg Castle in Lower Austria where it was registered
as abject No. 170 under inventory No. 129. Parts ofLower Austria, including
the part in which Feldsberg Castle is situated, became part of the territory of
the former State of Czechoslovakia in 1918. Feldsberg was subsequently re
named Valtice. At that time, the painting fonned part of the private art collec
tion of the then Reigning Prince of Liechtenstein, Franz Josef II, which was lo
cated at Valtice. At the end of the warin 1945, major parts of the collection
remained at Valtice among other places. After 1945- when Eduard BeneS re
tumed from exile in London - Prince Franz Josef II of Liechtenstein was no
longer allowed access to his estate. - 31 -
1.27 As a consequence of these discoveries, the present Reigning Prince Hans
Adam II of Liechtenstein, acting as a private persan and in his capacity as
owner of the painting, filed an application in the Landgericht KO!n (hereafter
"Regional Court of Cologne"). That Court bad jurisdiction over the painting
while it remained in the exhibition. Prince Hans-Adam II asked the Court to
grant an interim injunction to the effect that an arder for sequestration of the
painting should be granted. He claimed that he was the rightful owner of this
painting, as son and sole heir of his late father, Franz Josef II of Liechtenstein.
In accordance wîth his application, the Regional Court of Cologne ordered the
painting to be surrendered to the custody of a German bailiff acting as seques
trator until the conclusion of the proceedings on the merits of the case, i.e. until
a final court decision was reached on the question of whether Prince Hans
Adam II of Liechtenstein actually had a legally enforceable claim for restera
tianof the painting.
1.28 In the subsequent proceedings on the merits, Prince Hans-Adam II claimed
from the Municipality of Cologne that the painting should be finally returned to
him as its rightful owner. At this point the Brno National Historical Monu
ments Office - acting as a body of the State of Czechoslovakia which still ex
isted at thetime- intervened in support of the Municipality of Cologne, and the
whole lawsuit lasted for more than eight years. As it turned out during the legal
proceedings, ail traces of this painting bad been lost for sorne time, but in the
end it was determined to have fonned part of the assets that had been confis
cated as German assets by the then State of Czechoslovakia on the basis of De
cree No. 12 (Annex 6).
1.29 German civil courts, supported by the Bundesverfassungsgericht (hereafter
"Federal Constitutional Court"), dismissed the Prince's clairn, holding that
German courts had no jurisdiction in the case. The courts held that Germany
was bound by a treaty vis-à-vis the Allies not to raise objections under substan
tive law against expropriation measures which were taken against German ex- -32-
ternal assets for the purpose of paying German reparations, nor to hear cases
relating ta such measures before German courts. The German courts classified
Liechtenstein property as German assets in this context, and thereby included
the property of Liechtenstein citizens into the post-war reparations regime.
Subsequently the German govemment confirmed and adopted this position in
general tenns. This is the basis ofLiechtenstein's complaint. - 34-
A. Introduction
2.1 The present dispute bas to be seen in the context of the reparations regime, es
tablished by a number of treaties after the end of World War IL In general,
these treaties were premised upon the duty to make reparations for !osses suf
fered as a result of the war. For such reparation pm-poses, the Allied and Asso
ciated Powers were entitled to use both property belonging to Germany as a
State and property belonging to German nationals. This included also the prop
erty of German nationals located on foreign territory. Germany was further
obliged to compensate those German nationals whose property was affect.ed.
Thus responsibilities for reparations were not ultimately imposed on private
German citizens but on the German State. The Joss of German extemal assets,
i.e. German private properties which were expropriated for reparation pur
poses, was to be compensated for by Germany so asto achieve this result.
2.2 The post-war reparations regime was imposed by the Allied and Associated
Powers. These measures were implemented in the period prior to the termina
tien of the occupation. Subsequently, these measures were implemented by
Germany itself, in particular pursuant to the Settlement Convention to which
Germany was a party.
B. The measures taken by the Allied and Associated Powers
2.3 Even before the surrender of the German High Command on 8 May 1945, 10the
governments of the Allied Powers at their meeting in Yalta in February 1945
determined German's obligation to make reparations. Subsequently, after the
military surrender of Germany and the assumption of supreme authority over
Act ofMilitary Surrender, Berlin, 8 May 1945, United States of America, Executive Agreement
Series 502; 59 Stat. 1857; Official Gazette of the Control Council for Gennany, Supplement No.
1,p. 6. - 35-
Germany by the Allied Powers 11(Annex 10), this regime was further devel
oped by the Protocol of Potsdam of 2 August 1945 and by the Agreement of
Paris of 14 January 1946.
1.The Yalta Protocol of 11 February 1945
2.4 In the Protocol ofProceedings of the Crimea Conference (Yalta Protocol) (An
12
nex 11), which took place from 4 to Il February 1945, the heads of the gov
ernments of the United States of America, the United Kingdom and the Union
of Soviet Socialist Republics stated that Germany bad an obligation to make
reparations. Section 1 of the Protocol reads as follows:
"1. Germany must pay in kind for the lasses caused by ber to the
Allied nations in the course of the war. Reparations are to be re
ceived in the first instanceby those countries which have borne the
of the war, have suffered the heaviest ]osses and have
main burden
organised victory over the enemy."
2.5 According to Section 2 of the Protocol, reparation in kind was to be exacted
from Germany in three fonns, ofwhich the following îs most relevant:
"(a) Removals within two years from the surrender of Gennany or
the cessation of organized resistance from the national wealth of
Gennany located on the territory of Gennany herself as weil as
outside ber territory (equipment, machine-tools, ships, rolling
stock, German investments abroad, shares of industrial, transport
and ether enterprises in Germany, etc.), these removals to be car
ried out chiefly for purpose of destroying the war potential of Ger
many."
" Declaration regardîng the Defeat of Germany and the Assumption of Supreme Authority with re
spect to Gennany by the Governmentsf the United States of America, the Union of Soviet So
cialist Republîcs, theted Kingdom and the Provisional Government of the French Republic,
Berlin, 5 June 1945,nited Nations Treaty Series, No. 230; Official Gazette for the Control
Council for Germany, Supplement No. 1, pp. 7 et seq.
Protocol of the Proceedings of the Crimea Conference, British Conunand Paper, Cmd. 7088
(1947). - 36-
Thus the Yalta Protocol covered property located on the German territory as
weil as property outside ofit (German external assets).
2. The Potsdam Protocol of 2 August 1945
2.6 On 2 August 1945, the heads of govenunents of the United States of America,
the United Kingdom and the Union of Soviet Socialist Republics met in Pots
dam in arder to prepare the peace settlement in Europe. As a result of this
meeting, the Potsdam Protocol (Annex 12) provided for a division of the assets
concerned into two parts: a "Western zone" which would satisfy reparation
daims of the Western allies and an "Eastern zone" as regards reparation daims
13
from the Union of Soviet Socialist Republics.
2.7 Accordingly, Chapter IV (l) stated as regards reparation daims of the Union of
Soviet Socialist Republics:
"1. Reparation claims of the U.S.S.R. shall be met by removals
from the zone of Germany occupied by the U.S.S.R., and from ap
propriate German extemal assets."
2.8 Chapter IV (3) concemed reparation claims of the Western allies as well as
other countries. It reads as follows:
"3. The reparation claims of the United States, the United King
dom and other countries entitled to reparations shall be met from
the Western Zones and from appropriate German extema! assets."
2.9 The Protocol aimed solely at dividing German assets into two parts. It left open
the question ofwhich countries- other than the Allied Powers which were ex
pressly named- were entitled to reparations.
Official Gazette of the Control Cmmcil for Germany, Supplement No. 1, pp. 13 et seq.. - 37-
3. The Paris Agreement of 14 January 1946
2.10 The Agreement on Reparations from Germany, on the Establishment of an In
ter-Allied Agency and on the Restitution of Monetary Gold, signed in Paris on
14 January 1946 (the Paris Agreement) (Annex 13) concemed the allocation of
German reparations to 18 crediter States, including Czechoslovakia, and their
14
respective shares. German reparations were divided into two categories. In
Category A were included "ail fonns of German reparation except those in
cluded in Category B". In Category B were included "ali industrial and other
capital equipment removed from Germany, and merchant ships and inland wa
ter transport". Each signatory government was entitled to a pro rata share of
the total value of reparations. Czechoslovakia was entitled to a share of 3 % of
Category A reparations and 4.3 % of Category B reparations. An Inter-Allied
Reparation Agency (lARA) was set up to allocate German reparations among
the signatory states according to their respective shares.
2.11 As regards German extemal property, Part I Article 6 of the Paris Agreement,
provided as follows:
"A. Each Signatory Government shall, under such procedures as
it may choose, hold or dispose of German enemy assets within its
jurisdiction in manners designed to preclude their retum to German
ownership or control and shall charge against its reparation share
such assets (net of accrued taxes, liens, expenses of administration,
ether in rem charges against specifie items and legitimate contract
daims against the German former owners of such assets).
B. The Signatory Governments shall give to the Inter-Allied
Reparation Agency ali information for which it asks as to the value
of such assets and the amounts realised from time to time by their
liquidation.
Agreement on Reparation from Germany, on the Establishment of an lnter-Allied Reparation
Agency and on the Restitution ofMonetary Gold,is, 14 January 1946, United Nations Treaty
Series, No. 8105. -38-
C. German assets in those countries which remained neutral in
the war against German_yshall be removed from German owner
ship or control and liquidated or disposed of in accordance with the
authority of France, the United Kingdom and the United States of
America, pursuant ta arrangements to be negotiated with the neu
trals by these countries. The net proceeds of liquidation or disposi
tion shall be made available to the Inter-Allied Reparation Agency
for distribution on reparation account.
D. In applying the provisions of paragraph A above, assets
which were the property of a country which is a member of the
United Nations or its nationals who were not nationals of Germany
at the time of the occupation or annexation of this country by Ger
many, or of its entry into war, shall not be charged to its reparation
account. It is understood that this provision in no way prejudges
any questions which may arise as regards assets which were not the
property of a national of the country concerned at the time of the
latter's occupation or annexation by Germany or of its entry into
war.
E. The German enemy assets to be charged against reparation
shares shaH include assets which are in reality German enemy as
sets, despite the fact that the nominal o\Vllerof such assets is not a
German enemy. Bach Signatory Goverrunent shall enact legislation
or take ether appropriate steps, if it bas not already done so, to ren
der null and void ali transfers made, after the occupation of its terri
tory or its entry into war, for the :fraudulent purpose of cloaking
German enemy interests, and thus having them harmless from the
effect of control measures regarding German enemy interests.
F. The Assembly of the Inter-Allied Reparation Agency shall
set up a Committee of Experts in matters of enemy property custo
dianship in order to overcome practical difficulties of law and in
terpretation which may arise. The Committee should in particular
guard against schemes which rnight result in effecting fictitious or
other transactions designed to favour enerny interests, or to reduce
improperly the amount of assets which might be allocated to repa
ration."
Thus, in defining the notion of German external assets, an "enemy association"
was indispensable.
2.12 Itwas agreed that reparations were to be made through the lARA with its seat
in Brussels. Reparations in the sense of the Paris Agreement were those repara- - 39-
tions which were no tified to the Agency. As stated in Part I Article 6 A., it was
left up to the Signatory States how to hold and dispose of German enemy assets
located on their territory in order to prevent their retum to German ownership.
The assets were to be charged against the respective reparation share. Czecho
slovakia, as one of the parties to the Paris Agreement, notified an amom1t of
only USS189,263.00 to lARA for German extemal assets which were seized
. . 15
under the reparatiOns regrme.
C. Implementation of the agreements of the Allied and
Associated Powers
2.13 In implementation of the above mentioned agreements, two laws are ofparticu
lar importance, Control Council Law No. 5 and Allied High Commission Law
No. 63.
2.14 The Control Council was established by the Allied Powers. After Germany's
surrender on 8 May 1945, the four powers assumed supreme authority in and
over German y.It is stated in the first paragraph of the Allied Declaration re
garding the Defeat of Germany and the Assumption of Supreme Authority by
Allied Powers of5 June 1945 (Annex 10).
"The German armed forces on land, at sea and in the air have been
completely defeated and have surrendered unconditionally and
Gennany, which bears responsibility for the war, is no longer capa
ble ofresisting the will of the victorious Powers. The unconditional
surrender of Germany bas thereby been effected, and German y has
become subject to such requirements as may now or hereafter be
imposed upon her."
L Seidl-Hohenveldem, Comment on the decision of the Federal Constitutîonal Court of Justice
" of 29 January 1953,Neue Juristische Wochenschrift1953, p. 1389et seq;H. Slapnicka, Die
rechtlîchen Grundlagenfur die Behandlung der Deutschen und der Magyaren in der Tschecho
slowakei 1945 bis 1948, in: R.G. Plaschka (ed.)"Nationale Frage und Vertreibung in der
Tschoslowakei und Ungarn", 1938-1948, Verlag der Ùsterreichischen Akademie der Wissen
schaften, Wîen, 1997, p. 17. -40-
2.15 The fifth paragraph concems the assumption of supreme authority over the ter
ritory of German y:
"The Governments of the United States of America, the Union of
Soviet Socialist Republics and the United Kingdom, and the Provi
sional Government of the French Republic, hereby assume supreme
authority with respect to Germany, including ail the powers pos
sessed by the German govemment, the High Command and any
state, municipal, or local govemment or authority. The assumptîon,
for the purposes stated above, of the said authority and powers does
not effect the atmexation of Germany."
2.16 Germany was divided into four zones which were administered respective! y by
the supreme military commanders of the four powers. They dealt jointly,
through the Inter-Allied Control Council, with ail matters relating to the terri
tory as a whole including reparations. External assets taken as a reparation
measure were subject to Control Council Law No. 5.
2.17 After the Soviet Union had left the Control Council, the Allied High Commis
sion was set up. It consisted of representatives of the three Western powers: the
United States of America, the United Kingdom and the French Republic. Even
after the three occupying powers of the Western zone had accorded to the Fed
eral Republic limited power of self-govemment in the occupation statute of 10
16
Aprill949, sorne issues, including reparation, remained in the competence of
the Allied High Commission. Law No. 63 aimed at clarifying the status of
German extemal assets taken by way of reparation.
1. Law No. 5 of the Control Couneil of 30 October 1945
2.18 Law No. 5 of the Control Council concernmg "vesting and marshalling of
German extemal assets" of 30 October 1945 (Annex 14) vested German exter-
Official Gazette of the Allied High Conunission, No. 1, 10 Apri11949, p. 2. - 41 -
nal assets in a Commission establîshed by the law.17Even though the law was
intended to make provisions in particular for assets located in neutral States, it
is of particular importance since relevant terms such as "German nationality"
and "German property" were defined by the Allied Powers in that Law.
2.19 Article IX defines the scope of application of the Law as follows:
"Articles II and III of this Law shali not apply to assets subject to
the jurisdictionof the United Kingdom, British Dominions, India,
Colonies and Possessions, the Union of Soviet Socialist Republics,
the United States, France and any other United Nations determined
by the Control Council."
2.20 Article III of the Control Council Law deals with property located outside
Germany and the definition of German nationality. It reads as follows:
"Article III
Ali rights, titles and interests in respect of any property outside
Germany which is owned or controlled by any person of German
nationality outside Germany or by any branch of any business or
corporation or other legal entity organised under the laws of Ger
many or having its principal place of business in Germany are
hereby vested in the Commission.
For the purpose of this Article the term "any person of German Na
tionality outside Germany" shall apply only to a person who bas
enjoyed full rightsof German citizenship under Reich Law at any
time since 1 September 1939 and who has at any time sînce 1 Sep
tember 1939 been within any territory then under the control of the
Reich Govemment but shall not apply to any citizen of any country
annexed or claimed to have been annexed by Germany since 31
December 1937."
" Official Gazette of the Control Council for Germany, N~ovembe0 1r945,p.27. -42-
2.21 The term "property" was defined in Article X b) in bread terms as follows:
"The term "property" shall include ali movable and immovable
property and ali rights or interests in or daims to such property
whether matured or not, including ail property, rights, interests or
daims transferred to or held by third parties as nominees or trustees
and ali property, rights, interests or claims transferred by way of
gift or otherwise or for consideration, express or implied, but not
includîng the r:ightsor interests of third parties to a bona fide sale
for full consideration, and shall include but shall not be limited to
buildings and lands, goods, wares and merchandise, chattels, coin,
bullion, currency, deposits, accounts or debts, shares, claims, bills
of lading, warehouse receipts, ali kinds of financial instruments
whether expressed in Reichsmarks or in any foreign currency, evi
dences of indebtedness or ownership of property, contracts, judg
ments, rights in or with respect to patents, copyrights, trademarks,
etc., and in general property of any nature whatsoever."
2. Law No. 63 of the Council of the Allied High Commission
of 31 August 1951
2.22 By Law No. 63 of the Council of the Allied High Commission (Annex !5), the
three Western allies intended to clarify the status of Gennan extemal assets. 18
The preamble reads as follows:
"WHEREAS international agreements have been entered into by
the Allied Powers with respect to the liquidation of Gennan exter
nat assets and the removal of property from Gennany for the pur
pose of reparation,
WHEREAS the Declaration of London of January 5, 1943, re
served the rights of countries occupied by Gennany during the war
to the restitution of property which was looted or wrongfully re
moved from their territories,
WHEREAS property has been or may be transferred, liquidated or
delivered in accordance with the aforesaid agreements and declara
tion and
Law No. 63 clarifying the status of German extemal assets and of other property taken by way of
reparation or restitution, Official Gazette of the Allied High Commission, No. 8, p. Il 07. -43-
WHEREAS îtappears expedient to give recognition by legislation
to, and to define certain legal consequences of, the divesting of title
to the aforesaid property,
NOW THEREFORE for the purpose of quieting title and of pre
venting unwarranted disputes and litigations;
The Council of the Allied High Commission enacts as follows:"
2.23 The law addresses German extemal assets in Article 1 (1) (a) as follows:
"any property which, on or prier to the effective date of this Law,
was located in any foreign country and Gennan-owned and which,
after September 1, 1939, bas been or will be transferred or liqui
dated under the law of such country, or under the law of any ether
country by agreement with the former country
(i) pursuant to measures taken in connection with the war
against Germany by the government of any country which bas ad
hered to the United Nations Declaration of January 1, 1942, or
(ii) pursuant to any agreement, accord or treaty regarding the
disposition of German extemal assets which bas been or will be
concluded with the participation of France, the United Kingdom
and the United States of America, or
(iii) pursuant tc measures taken in satisfaction of claims against
Germany, or
(iv) pursuant to reparation measures in Japan or Tangier;"
2.24 Article 3 enacted the non-objection and inadmissibility rule according to which
the seizure of property for reparation purposes shall not be objected to and any
claims relating thereto shall be inadmissible:
"No claim or action based on or arising out of the transfer, liquida
tion or delivery of property to which this law extends shall be ad
missible:
(a) against any persan who bas transferred or acquired title to or
possession of such property or against such property, -44-
(b) against any international agency, any govemrnent of a foreign
country, or any person acting in conformity with the instructions of
such agency or government."
2.25 German y in the meaning of the Law was the territory of the former Reich on
31 December 1937. Article 4 (a) and (b) state:
"For the purposes of this Law:
(a) the tenn "foreign country" means any country except Ger
many and the countries listed in the Schedule to this Law;
(b) the tenn "German y" means the territory of the former Reich
onDecember31, 1937."
2.26 Neither Liechtenstein nor Czechoslovakia was listed in the Schedule to the
Law. Each was accordingly a "foreign country" in the meaning of Article 4 (a).
German assets located in Czechoslovakia were German extemal assets.
D. The Settlement Convention of26 May 1952
2.27 The Convention on the Settlement of Matters arising out of the War and the
Occupation (Settlement Convention) (Annex 16) is one of four Conventions
19
that were signed at Bonn on 26 May 1952. These Conventions, to which the
three Western allies as well as the Federal Republic of German y were parties,
were designed to end the occupation regime in the Western zone. However, the
reparations regime established by the measures of the Allied and Associated
Powers was continued. The ether three conventions were:
Convention on the Settlement of Matters arising out of the War and the Occupation, signed by
the United Kingdom, the French Republic, the Unitedes of America and Federal Republic of
Germany, Bonn, 26 May 1952, United Nations TreatySerîes, No. 4762. -45-
• the Convention on Relations between the Three Powers and the
Federal Republic of Germany (hereafter the "Relations Conven
tion")/0
• the Convention on the Rights and Obligations of Foreign Forces
21
and their Members in the Federal Republic ofGerrnany; and
22
• the Finance Convention.
The conventions dîd not enter into force in their original form. They were sub
sequently amended by five schedules to the Protocol on the Termination of the
Occupation Regime in the Federal Republic of Germany, one of the agree
ments signed in Paris on 23 October 1954. 23 The amended Conventions entered
into force on 5 May 1955.
2.28 In Article 1 (1) of the Relations Convention (Annex 17), it îs stated:
"1. On the entry into force of the present Convention the United
States of America, the United Kingdom of Great Britain and
Northern Ireland and the French Republic (hereinafter and in the
related conventions sometimes referred to as "the Three Powers")
will terminate Ùle Occupation régimein the Federal Republic, re
voke the Occupation Statute and abolish the Allied High Commis
sion and the Offices of the Land Commissioners in the Federal Re
public."
Convention on Relations between the Three Powers and the Federal Republic of Germany,
signed by thenited Kingdom, the French Republic, the United States of America and the Fed
eral Republic ofGermany, Bonn, 26 May 1952, United Nations Treaty Series, No. 4759.
United Nations Treaty Series, No. 4760.
United Nations Treaty Series, No. 4761.
Protocol between the United Kingdom of Great Britain and Northem Ireland, the United States
of America, the French Republic and the Federal Republic ofGermany on the Tennination of the
Occupation Regime in the Federal Republic ofGermany, Paris, 23 October 1954, United Nations
TreatySeries, No. 4758. -46-
As regards sovereignty it is stated in paragraph 2 of this Article:
"2. The Federal Republic of German y shaH have accordingly the
full authorityof a sovereign State over its internai and extemal af
fairs."
However, according to Article 2, the three Western allies retained their rights
relating to Germany as a whole. It is stated:
"Article 2
In view of the international situation, which bas so far prevented
the re-unification of Gennany and the conclusion of a peace sertie
ment, the Three Powers retain the rights and the responsibilities,
heretofore exercised or held by them, relating to Berlin and to
Germany as a whole, including the re-unification of German y and a
peace settlement. The rights and responsibilities retained by the
Three Powers relating to the stationing of armed forces in German y
and the protection oftheir security are dealt with in Articles 4 and 5
of the present Convention."
2.29 Reparation measures are dealt with in Chapter Six of the Settlement Conven
tion. These were intended to be of a provisional nature. In Article 1 of Chapter
Six it is stated:
"L The problem of reparation shall be settled by the peace treaty
between German y and its former enemies or by earlier agreements
concerning this matter. The Three Powers undertake that they will
at no time assert any claim for reparation against the current pro
duction of the Federal Republic.
2. Pending the final settlement envisaged in paragraph 1 of this
Article, the following provisions shall apply."
2.30 With the termination of the occupation regime, Law No. 5 of the Control
Council (Armex 14) was deprived ofits effect in the Western zone. However, it
was not revoked as a law of the four Allied Powers. The Federal Republic
agreed not to repeal or amend Law No. 63 of the Allied High Commission -47-
(Annex 15). Article 2 ofChapter Six of the Settlement Convention (Annex 16)
reads as follows:
"Control Council Law No. 5 is deprived of effect in the Federal ter
ritory, except in respect of the countries listed in the Schedule to
AIIied High Commission Law No. 63, as amended by Decision No.
24 of the Allied High Commission, but shall not be further de
prived of effect or amended without the consent of the Three Pow
ers. The Federal Republic will not repeal or amend Law No. 63 ex
cept with the consent of the Three Powers. However, paragraph 1
of Article 6 of Law No. 63 sha11be deemed to be repealed and
paragraph 2 to be amended to provide that the powers therein con
ferred upon the Allied High Commission may be exercised by the
Federal Government. The Federal Republic undertakes that appro
priate decisions under Article 6 of Law No. 63, as so arnended, re
moving the countries from the list in the Schedule thereto shall be
issued after the Three Powers have consented."
2.31 As regards reparation measures, the non-objection and inadmissibility rule is
stated in Article 3(1)and (3):
"1. The Federal Republic shall in the future raise no objections
against the measures which have been, or will be, carried out with
regard to German extemal assets or other property, seized for the
purpose of reparation or restitution, or as a result of the state of
war, or on the basis of agreements concluded, or to be concluded,
by the Three Powers with other Allied countries, neutra! countries
or former allies ofGermany.
2. The Federal Republic shall abide by such provisions regulat
ing German external assets in Austria as are set forth in any agree
ment to which the Powers now in occupation of Austria are parties
or as may be contained in the future State Treaty with Austria.
3. No claîm or action shall be admissible against persons who
shall have acquired or transferred title to property on the basis of
the measures referred to in paragraph 1 and 2 of this Article, or
against international organizations, foreign governments or persons
who have acted upon instructions of such organizations or govem
ments." -48-
2.32 Article 5 of Chapter Six stated that Germany is obliged to compensate the for
mer owners of property seized. It reads as follows:
"The Federal Republic shall ensure that the former owners of prop
erty seized pursuant to the measures referred to in Articles 2 and 3
of this Chapter shall be compensated."
2.33 Article 4 expressly provided for the possibility of German y negotiating agree
ments with ali countries which bad been at war with Gennany since 1 Septem
ber 1939 regarding German externat assets which bad not been transferred or
liquidated. However, this did not apply to members of lARA, and thus not to
Czechoslovakia which was a member of lARA.
2.34 Negotiations with the member countries of lARA, including Czechoslovakia,
were only possible so far as specifie assets were concerned. Article 4 (2) of
Chapter Six of the Settlement Convention provides as follows:
"2. Moreover, the Federal Republic may negotiate agreements
with the member countries of lARA, provided such agreements re
late only to:
(a) property of the types which member countries of the lARA
may, under Part III of the lARA accounting rules, voluntarily ex
elude from the charge to be made under Part II ofthe rules;
(b) securities of German issue expressed in Reichsmarks;
(c) pensiOns;
(d) a final date for sequestration of German property in countries
in which such a date bas not yet been determined."
2.35 The Settlement Convention did not terminate the reparation regime. On the
contrary, the non-objection and inadmissibility rule first enacted by Law No.
63 of the Allied High Commission was upheld. The Federal Republic agreed
not to abject to the seizure of property for reparation purposes and to consider -49-
any claims relating thereto to be inadmissible. It also agreed to compensate the
former owners of the property concemed.
E. Further development of the Settlement Convention
2.36 The situation remained unchanged until 1990. Germany's reunification created
a situation which required amendments to the existing regime. However, a final
settlement of the reparation issues was not achieved. To the contrary, certain
provisions of the Settlement Convention remained in force.
1. The Treaty on the Final Settlement with respect to German y
of 12 September 1990 (Two-Pius-Four-Treaty)
2.37 On 12 September 1990, the Treaty on the Final Settlement with Respect to
Germany (hereafter the "Two-Plus-Four-Treaty") (Annex 18) was signed in
Moscow by the German Republic, the German Democratie Republic, the
French Republic, the Soviet Union, the United Kingdom and the United States
of America. 24 The Treaty aimed at finally ending the post-war regime by con
ferring upon German y full sovereignty over its internai and extemal affairs. As
stated in the 13th paragraph of the preamble:
"Recognizing that thereby, and with the unification of Germany as
a democratie and peaceful state, the rights and responsibilities of
the Four Powers relating to Berlin and Germany as a whole Jose
their function;"
Treaty on the Final Settlement with Respect ta Germany, signed by the Federal Republic of
" Germany, the German Democratie Republic, the French Republic, the United Kingdom of Great
Britain and Northem Ireland and theted States of America, Moscow, 12 September 1990,
United Nations Treaty Series, No. 29226, Federal Law Gazette (Bundesgesetzblatt) 1990 II, p.
1318. -50-
2.38 Consequently, Article 7 of the Treaty states that:
"(1) The French Republic, the Union of Soviet Socialist Repub
lics, the United Kingdom of Great Britain and Northem Ireland and
the United States of America hereby terminate their rights and re
sponsibilities relating to Berlin and to Gennany as a whole. As a
result, the corresponding, related quadripartite agreements, deci
sions and practises are tenninated and all related Four Power insti
tutions are dissolved.
(2) The united Germany shall have accordingly full sovereignty
over its interna] and external affairs."
The Treaty thus ended the post-war regime by terminating the rights of the four
Allied Powers and acknowledging Germany's full sovereignty.
2. The Exchange of Notes of27 and 28 September 1990
25
2.39 Following an Exchange of Notes on 27 and 28 September 1990 (Annex 19),
an agreement was reached between the govenunents of the Federal Republic of
Germany and the three Western Allies conceming the Relations Convention as
weil as the Settlement Convention (Annex 16). In principle, it was agreed that
both Conventions would tenninate on the date of the entry into force of the
Two-Plus-Four-Treaty. It is stated in the Exchange ofNotes:
"1. The Convention on Relations between the Three Powers and
the Federal Republic of German y of 26 May 1952 (as amended by
Schedule I to Protocol on the Termination of the Occupation Ré
gime in the Federal Republic of Germany, signed at Paris on 23
October 1954) ("the Relations Convention") shall be suspended
upon the suspension of the operation of quatripartite rights and re
sponsibilities with respect to Berlin and to Germany as a whole,
and shall terminate upon the entry into force of the Treaty on the
Exchange of Notes constituting an Agreement conceming the Relations Convention and the Set
tlement Convention between the Three Powers and the Federal Republic of Gennany of 27/28
Septemher 1990,United Nations TreatySeries, No. 28492, Federal Law Gazette (Bundesgesetz
blatt)990 II, p. 1386. -51 -
Final Seulement with respect to German y, signed at Moscow on 12
September 1990.
2. Subject to paragraph 3 below, the Convention on the Settle
ment of Matters arising out of the War and the Occupation of 26
May 1952 (as amended by Schedule IV to the Protocol on the Ter
mination of the Occupation Régime in the Federal Republic of
Germany, signed at Paris on 23 October 1954) ("the SeUlement
Convention") shall be suspended and shall terminate at the same
time as the Relations Convention; this also applies to the letters and
exchanges of letters relating to the Relations Convention and the
Seulement Convention."
However, it was agreed that the Settlement Convention shall partly remain in
force. In particular Article 3 (!)and (3) ofChapter Six of the Settlement Con
vention. The relevant text of paragraph 3 of the Exchange of Notes reads as
follows:
"The following provisions of the Settlement Convention shall,
however, remain in force:
Chapter Six:
Article 3, paragraphs 1 and 3
"
2.40 The Government of the Federal Republic expressly assumed the obligation to
adhere to the Settlement Convention. It is stated in paragraph 4 (a) of the Ex
change of Notes:
"4. (a) The Govemment of the Federal Republic of Germany de
clares that it shall takei adequate measures to ensure that the pro
visions of the Settlement Convention which remain in force shall
not be circumvented in the territory of the present German Democ
ratie Republic and in Berlin." -52-
2.41 The non-objection and inadmissibility rule of Article 3 (1) and (3) of Chapter
Six of the Settlement Convention was thereby confirrned. It lost its provisional
character and became final. By virtue of the revocation of Article 1 of the Set
tlement Convention, the rule (which bad hitherto been regarded as having only
a temporary effect, pending the conclusion of a peace treaty) acquired a per
manent character. -54-
A. Introduction
3.1 Once the occupation status bad come to an end and the Allied Powers bad re
stored to Germany competence over its internai and extemal affairs, Germany
was obliged to accept the legal framework established by the Allied Powers af
ter the end of the war as a given fact. Germany consistent!y stressed, however,
that its consequent acceptance of the confiscation of German extemal assets for
purposes of reparations as a given fact in no way implied a recognition ofthese
measures. German y always referred to the preliminary nature of ail reparation
measures and in particular the Settlement Convention and maintained that a fi
nal settlement of al! questions related to World War II and the post-war regime
could only be dealt with by a peace treaty. It was never suggested that Liech
tenstein, as a neutral State, was subject to the reparation system as described
above.
3.2 This position changed in the 1990s, when Germany, contrary to its invariable
practice hitherto
(a) as a consequence of a decision of its highest constitutional court, for the
first time included Liechtenstein assets among "German external assets"
within the meaning of Article 3 ofChapter Six of the SeUlement Conven
tion and
(b) by entering into the Exchange of Notes of27/28 September 1990, pennit
ted the conversion of the hitherto ternporary reparations regime into a fi
nal settlement and thereby terminated Germany's obligation to compen
sate former owners of property seîzed for the purpose of reparation. -55-
B. Germany's former position
3.3 Germany consistently held the opm10n that the seizure of German extemal
property for reparation purposes was contrary to international law. When Ger
many became a party to the Settlement Convention, however, it agreed to the
non-objection and inadmissibility rule provided for in Article 3 (1) of Chapter
Six of the Settlement Convention. Thereby, Germany accepted that German ex
tema! assets were used for the purpose of reparations. It agreed not to raise any
objections to the measures. Although the German Government was well aware
of the fact that the V.'estemAllied Powers were of the opinion that the tîtle of
ownership bad been lost with respect to German assets properly so-called (i.e.,
that there bas been a divesting of title),itexpressly avoided recognising these
measures. The property question was thus left open.
1. Germany regarded seizure of German external assets as unlawfnl
3.4 In the opinion of Getmany, the seizure of German external property as a con
sequence of World \Var II was unlawful, on the grounds that such measures
could only be imposed by a peace treaty. No such peace treaty was concluded
after the end ofWorld War II.
3.5 Accordingly, in 1952 the Committee of the Federal Parliament for the Occupa
tion Statute and Other External Affairs described the seizure of German exter
nal assets as "advance reparations" (Annex 20). 26 The relevant sentences of the
report read as follows:
"VO/kerrechtlich ist die Auferlegung von Reparationen jedoch nur
durch einen Friedensvertrag mOglich. Die Maj3nahmen gegen das
deutsche Eigentum verstoj3engegen die Bestimmungen der Haager
Landkriegsordnung von 1907... Die Verletzung des vOlkerrechtli-
Report of the Committee of the Federal Parliaments for the Occupation Statute and Other Exter
nal Affairs, Official Gazette of the Parliament (Bundestags-Drucksache), No. 3389, p. 6. -56-
chen Grundsazzes, dajJ Reparationen nur von dem unterlegenen
Staal und nicht von einer willkürlich herausgegriffenen Gruppe
seiner StaatsangehOrigen zu leisten seien, ist bis zur letzten Folge
rung durchgefiihrt worden."
Translation:
"In international law the imposition of reparations is however only
possible by means of a peace treaty. The measures against German
property contravene the provisions of the Hague Convention N
Respecting the Laws and Customs of War on Land of 1907 ......
The contravention of the basic principle of international law that
reparations have to be made by the defeated country and not from a
group of its nationals chosen at random, has been carried out to the
fullextent."
3.6 The German Govemment was of the opinion that title to ownership was not af
fected by what it regarded as unlawful expropriation measures. For example,
when the question arase as to whether ownership of securities had passed fol
lowing their confiscation for reparation purposes, the Secretary of State of the
Federal Ministry of Finance drew the attention of the Federal Parliament to the
fact that seizures carried out by the Allied and Associated Powers or other
States outside German territory could not be recognised as a valid basis for ac
quiring title to a security. Therefore, the Czechoslovakian State did not acquîre
the ownership of securities that were expropriated and, consequent!y, could not
have these securities registered under the Law on Validation of Securities
27
(Wertpapierbereinigungsgesetz) of 19 August 1949. On 22 February 1951,
the Secretary of State of the Federal Ministry of Finance stated as follows (An
28
nex 21):
"Eigentumsübergiinge nach dem 1. Januar 1945 aufgrund von
Maftnahmen der Hohen Hand werden nur anerkannt, wenn es sich
um rechtswirksame MajJnahmen der BehOrden oder der Besat
zungsmi:ichte des Wiihrungsgebietes handel!. Andere Mafinahmen
von Hoher Hand, also von BehOrden und Besatzungsmiichten au-
Law Gazette of the Administration of the United Economie Area (Gesetzblatt der Vemaltung
des Vereinigten Wirtscha.ftsgebietes) 1949, p. 295.
Stenographer's Report of the 120thSession of the Federal Parliament, 22 February 1951, p. 4582. -57-
flerhalb des Wiihrungsgebietes, werden nicht anerkannt. Danach
müssen die Anmeldungen des tschechoslowakischen Staates, soweit
sie enteignete Wertpapiere sudetendeutscher Eigentümer betreffen,
abgelehnt werden."
Translation:
"Transfer ofpro~e rfery1 January 1945 because ofmeasures of
2
the 'High Hand' shall only be recognised if these are legally effec
tive measures of the authorities or the occupying powers of the cur
rency area.30Other measures of the 'High Rand', that is to say of
authorities and occupying powers outside the currency area, shall
not be recognised. Accordingly the registrationsof the Czechslova
kian State inasmuch as they contain expropriated securities of
Sudeten German owners, will have to be refused."
2. Germany acknowledged the reparation measures only as a fact
and did not recognize them
3.7 During the negotiation of the SeUlement Convention, Gennany was obliged to
accept the reparation measures as a given fact. However, it carefully avoided
recognizing them. Accordingly, in its Explanatory Memorandum to the Federal
31
Parliament on the Settlement Convention of 21 July 1952 (Annex 22), the
Federal Government interpreted the Settlement Convention in Chapter Six on
reparations as follows:
"Wie in den Friedensvertriigen, die den ersten Weltkrieg beende
ten, haben auch die Siegermiichte des zweiten Weltkrieges in den 6
bisher geschlossenen Friedensvertriigen das in ihrem Gebiete be
legene private AuslandsvermOgen der besiegten Nationen zu Repa
rationszwecken herangezogen. Das gleiche ist fiir Deutschland im
Potsdamer Ab!wmmen von den Groj3miichten vereinbart worden.
Kontrollratsgesetz Nr. 5 und AHK-Gesetz Nr. 63 sind zur Durch
filhrung dieser Vereinbarungen er/assen worden, und 19 alliierte
Staaten haben das Pariser interalliierte Reparationsabkommen
vom 14. Januar 1946 geschlossen.
"High Hand" means the Allied Powers.
"Currency area" is the geographical area in which the German Mark was used.
" Explanatory Memorandum to the Settlement Convention, Annex 4 to the Official Gazette of the
FederalParliament (Bundestags-Drucksache), No. 3500,21 July 1952, pp. 54-56. -58-
Die Verwendung des deutschen AuslandsvermOgens fiir Reparati
onszwecke durch internationale Abkommen und durch Gesetze der
Besatzungsmëichte war ais eine harte Tatsache hinzunehmen. Es
mujJtedarauf ankommen, diese internationalen Abkommen und Ge
setze nach Môglichkeit aufzulockern. Dies dürfte im wesentlichen
gelungen sein.
Eine Anerkennung der interalliierten Vertriige und der Gesetze der
Besatzungsmfichte ist in dem Vertrage vermieden worden. Die
Bundesrepublik erkltirte nur, in Zukunft keine Einwendungen gegen
die EnteignungsmajJnahmen zu erheben (Artikel 3 Absatz (1)). Dar
in liegt ein deutlicher Hinweis auf den bisher ge/tend gemachten
Rechtsvorbehalt und nur ein Verzicht auf dessen künflige Wieder
holung, jedenfalls keine Anerkennung der Rechtmiij3igkeitder vor
genommenen Maftnahmen."
Translation:
"As in the peace treaties which terminated the First World War, the
victorious powers of the Second World War have, in the peace trea
ties of which six have so far been concluded, also bad recourse to
the private external assets of the conquered states which were lo
cated on their territory for the purposes of reparation. The same has
been agreed by the big powers with respect to Germany in the
Potsdam Agreement. The Control Council Ordinance No. 5 and
AHC Law No. 63 were adopted for the purpose of implementing
these agreements and 19 Allied countries concluded the Paris Inter
Allied Reparation Agreement of 14January 1946.
The use of German extema! assets for the purposes of reparation on
the basis of international agreements and laws of the occupying
powers bad to be accepted as a hard fact. It was a matter of relaxing
these international agreements and Iaws where possible. This ought
to have been for the most part achieved.
The recognition of the inter-allied treaties and the laws of the occu
pying powers was avoided in the Convention. The Federal Repub
lic merely stated that it would not in the future raise any objections
against expropriation measures (Article 3 para. 1 ). Herein lies a
clear referenceto the legal reservation previously asserted and on!y
a dispensation wîth its future reuse, in any case no recognition of
'· the measures carried out." -59-
3.8 Thus, Germany accepted that German extemal assets were used for the pur
poses of reparation. It agreed not to raise any objections to the measures. Al
though the German Govemment was weil aware of the fact that the Western
Allied Powers were of the opinion that the title of ownership had been lost (i.e.,
32
that there bad been a divesting oftitle), itexpressly avoided recognising these
measures.
3.9 Accordingly, the Committee for Legal Issues and Constitutional Law stated in
its written report on the Settlement Convention (Annex 23): 33
"Die Bundesregierung erkennt die Rechtsgültigkeit der Enteignun
gen nicht an. Nach den Mitteilungen der Verhandlungsführer ist
gerade deshalb die Formulierung gewtihlt, daft sie gegen die alli
ierten Maj3nahmen, die schon beschlagnahmtes VermOgen betref
fen, keine Einwendungen erheben will. lm Zusammenhang damit
werden auch keine Klagen aus den der Vergangenheit angehOrigen
Tatbestiinden in den Vertragsstaaten zugelassen werden. Aber eine
rechtliche Anerkennung der Enteignung ist damit nicht gegeben."
Translation:
"The Federal Government does not recognize the validity of the
expropriations. According to information from the negotiators
[Note of the translater: of the Convention], this is exact}y why
wording bas been agreed on to the effect that no objections are to
be raised against the allied measures affecting property already
confiscated. In this context, claims relating to facts from the past
are not to be admitted in the contracting states. However, this does
not constitute a legal recognition of the expropriation."
3.10 In its Explanatory Memorandum (Annex 22), the Federal Government referred
to German external assets. There was no mention of the inclusion within the
scope of the Convention of assets owned by non-Germans; i.e., citizens of a
neutral State such as Liechtenstein.
See above paras. 2.13 et seq.
Report of the Committee for Legal Issues and Constitutional Law of 15 November 1952, Official
Gazetteof the Federal Parliament (Bundestags-Drucksache), No. 1/3900, pp. 32 et seq., p. 37. -60-
3.11 The situation was not affected in 1973, when the Prague Treaty (Annex 24)
was signed. This Treaty on Mutual Relations between Germany and Czecho
slovakia34 was intended to hannonize relations between the two States. In the
preamble, it is stated:
"Purposing to create lasting foundations for the development of
good-neighbourly relations ... "
3.12 The Treaty did not address reparation measures. Until today, Czechoslovakia
and subsequently the Czech Republic, bas unsettled reparation claims of
approx 315 billion Kcs. 35Germany is well aware of this fact. 36 However, as
concems the Prague Treaty, the German Govemment made clear in a statement
37
of 11 June 1974 (Annex 26) thal:
"dieser Problemkreis nicht Teil der Verhandlungen war, daj3 der
Vertrag nicht ein Friedensvertrag, sondern ein Vertrag zur Norma
lisierung der Beziehungen ist, in dem über Reparationen und das
Vermdgen der Sudetendeutschen nicht verhandelt worden ist."
Translation:
"this issue package was not part of the negotiations, that the Treaty
is not a peace treaty, but a Treaty on the normalisation of relations,
in which reparations and the Sudeten-German assets have not been
negotiated on."
Treaty on the Mutual Relations between the Federal Republîc of Germany and the Czechoslovak
Socialist Republic,1 December 1973, United Nations Treaty SeriesNo. 13589, Federal Law
Gazette(Bundesgesetzblatt)1974 Il, p. 990.
Memorandum for the Prague Treaty, 11 December 1973, Official Gazette of the Federal Assem
blyof the Czechoslovakian Socialist Republic 1974, No. 66; see also Memorandum to the Ger
man-Czech Declaration of 17 December 1996, reprinted in German: D. Blumenwitz, lnteres
senausgleich zwischen Deutschland und den Ostlichen Nachbarstaaten, Wissenschaft und
Politik, Kôln, 1998, pp. 139-144.
Statement of defense of 25 June 2001, Proceedings before the Administrative Court of Berlin
(Kretschmer ./..Federal Republic ofGermany, Ref. No. VG I A61.00) (Annex 25).
Statement of the German Govemment conceming the Prague Treaty of 11 June 1974, Official
Gazetteof the Federal Parliamen(Bundestags-Drucksache), No. 7/2270 of 17 June 1974, p. 4. - 61 -
3.13 This was again stressed by the Constitutional Court in a decision of 25 January
1977 on the Prague Treatl 8(Annex 27) in paragraphs 2 and 3 of the substan
tive part of the judgment:
"2. Der Abschlu./3des deutsch-tschechoslowa/dschen Vertrags
kann auch nicht ais ein Mitwirken der Bundesregierung an den
tschechoslowakischen Konfiskationsma.flnahmen gedeutet werden.
Der Vertrag selbst enthiilt keine Bestimmung, die sich auch nur
entfernt auf Fragen des deutschen Privateigentums bezieht. Die
Bundesregierung hat auch bei Vertragsabschluj3 keine auf die von
den tschechoslowakischen Behdrden vorgenommenen Konfiskati
onsmafinahmen bezügliche Willenserkliirung abgegeben und insbe
sondere keine Billigung oder AnerlŒnnung dieser MafJnahrnen
ausgesprochen.
3. Dem Vertrag kann auch nicht die Wirkung beigemessen wer
den, in sonstiger Weise eine Veriinderung der eigentumsrechtlichen
Lage zum Nachteil der Beschwerdefohrer herbeigefohrt zu haben.
Dabei kann offenbleiben, ob der deutsch-tschechoslowakische Ver
trag einen Wechsel des staats- und vOlkerrechtlichen Status der
Sudentengebiete im Sinne des Vortrags der Beschwerdeführer be
wirkt hat. Jedenfalls hat eine nachtriigliche Legalisierung der ge
gen das Grundeigentum der Beschwerdefohrer gerichteten tsche
choslowakischen KonfiskationsrnafJnahmen im Zusammenhang mit
dem Vertrag nicht stattgefunden. Ebensowenig enthëilt der Vertrag
eine Bestimmung, die als Verzicht au[ die Geltendmachung etwai
ger daraus resultierender Ansprüche verstanden werden kOnnte.
Soweit also den Beschwerdeführern bei VertragsabschlufJ hinsicht
lich ihres Verm6gens noch Eigentumsrechte oder Rückgewiihr- und
Entschiidigungsansprüche zustanden, hat sich die Rechtslage durch
den Abschluj3des Vertrags nicht verêindert."
Translation:
"2. The conclusion of the German-Czechoslovakian Agreement
cannet be construed as an acceptance by the Federal Govemment
of the Czechoslovakian confiscation measures. The agreement it
self does not contain any provision that is even rernotely concerned
with issues of German private assets. Upon conclusion of the
agreement, the Federal Govemment did not issue any manifestation
of intent with reference to the confiscation measures taken by the
" Decision of the Federal Constitutional Court (Entscheidungen des Bundesverfassungsgerichts,
BVerfGE), No. 43, pp. 203 et seq. - 62-
Czechoslovak:ian authorities and, in particular, did not express any
approval or recognition ofthese measures.
3. The agreement cannat be credited with having caused in any
way a change of the property law situation to the detriment of the
applicants.At the same time, it can remain open whether the Ger
man-Czechoslovakian agreement bas brought about a change in the
national and international status of the Sudeten territories within
the meaning of the argument of the applicants. In any case, there
bas been no subsequent legalisation of the Czechoslovakian confis
cation measures directed against the real property of the applicants
in connection with the agreement. Nor does the agreement contain
a provision that could be understood as a waiver of the assertion of
possible claims resulting out of this. Inasmuch, therefore, as the
applicants upon conclusion of the agreement are still entitled to
ovmership rights or claims of restitution and compensation with re
spect to their assets, the legal situation bas not changed as a result
of the conclusion of the agreement."
3.14 Germany carefully avoided recognizing the legality of seizure of German ex
tema! assets. Thus, the property question was left open even after the Prague
Treaty was signed. According to the German position, there was no loss oftitle
following the confiscations effected for example by Czechoslovakia at the end
of the war. Gennany bad accepted that reparation claims of Czechoslovakia
bad been left open, but there was never any question of including confiscated
of Liechtenstein, a neutra! State during the war, into this regime.
property
C. Germany's position after amendments of the
Settlement Convention
3.15 Until 1990, the year in which the Two-Plus-Four Treaty and the Amendments
to the SeUlement Convention were signed, Germany's position was clear in
princîple. The confiscation measures based on the "BeneS Decrees" (încluding
the confiscation of Liechtenstein property) were not recognized because Ger
many took the view that they violated generally accepted rules of international
law and regarded them as being of a preliminary nature only, pending their fi- - 63-
nal resolution by a peace treaty. There was never any question that property of
neutra] States was covered by the Settlement Convention.
3.16 Since 1990, this position has changed fundamentally in a series of graduai
steps, commencing with the Pieter~van case aaer the judgments of the
German courts, reaching îts climax in Germany's position before the European
Court of Human Rights in Strasbourg and ensuing diplomatie correspondence
and consultations.
1.The decisions of the German Civil Courts
in the Pieter-van-Laer case
3.17 By their judgments of 10 October 1995 and 9 Ju1y 1996 respectively, both the
Court of first instance, the Regional Court of Cologne (Annex 28), and the
Oberlandesgericht KO!n(hereafter "Court of Appeal of Cologne") (Annex 29),
rejected thedaim of Prince Hans-Adam II of Liechtenstein for the restoration
of the painting. They ruled that they had no jurisdiction over such a claim by
virtueof the SeUlement Convention.
3.18 Both German courts invoked the inadmissibility rule of Article 3 (3) of Chapter
Six of the Settlement Convention (Annex 16), thereby denying the plaintiffthe
relief sought.
3.19 The German civil courts held that the regulations cited were still applicable, ir
respective of the tennination of the Allied Powers' rights and responsibilities
relating toGennany as a whole set out in the Two-Plus-Four Treaty (Annex
18). In the courts' opinion, the agreement concluded between the governments
of the Federal Republic ofGermany and the Three Powers on 27/28 September
1990 stipulated rather that individual provisions of the Settlement Convention
remained in force, including Article 3 (1) and (3) of Chapter Six of the Settle- - 64-
ment Convention. The Court of Appeal of Cologne stated in its decision of 9
July 1996:
"Das in Art. 7 Abs. 1 S. 2 Zwei-plus-Vier-Vertrag statuierte Er/6-
schen der Vier-Miichte-Rechte in bezug auf Deutschland als Gan
zes wird ergiinzt durch die Ziffern 2 und 3 der Vereinbarung der
Regierung der Bundesrepublik Deutschland und der drei West
Alliierten vom 27.128.09.1990 zu dem Vertrag über die Beziehun
gen zwischen der Bundesrepublik Deutschland und den Drei Mêich
ten sowie zu dem Vertrag zur Regelung aus Krieg und Besatzung
entstandener Fragen. Gemiij3 Ziffer 2 dieses Abkommens tritt der
Überleitungsvertrag mit Ausnahme der in Ziffer 3 aufgefiihrten
Einzelbestimmungen des Vertragswerkes, zu denen auch Teil VI
Art. 3 Abs. 1, 3 ziihlt, auj3erKraft." (page 8/9 of the decision)
Translation:
"The extinction of quadripartite law with respect to Germany as a
whole, as established by Article 7 paragraph 1 sentence 2 Two
Plus-Four Treaty, is supplemented by paragraphs 2 and 3 of the
agreement between the govemments of the Federal Republic of
Germany and the three Western Allies dated September 27/28 1990
with respect ta the Convention on Relations between the Three
Powers and the Federal Republic of Germany and the Convention
on the Settlement ofMatters Arising out of the War and the Occu
pation. In accordance with paragraph 2 of this Convention, the Set
tlement Convention ceases to be in force with the exception of in
dividual provisions of the instrument listed under paragraph 3,
which also includes Article 3 paragraph 1 and 3 of Chapter Six."
(page 7 of the translation)
3.20 In the opinion ofboth the Regional Court of Cologne and the Court of Appeal
of Cologne, the applicability of Article 3 (3) of Chapter Six of the Settlement
Convention extends to Liechtenstein citizens. According to this view, Liech
tenstein property is to be regarded as German extemal assets within the mean
ing of Article 3 in so far as German courts are obliged ta accept the categorisa
tion by the then Czechoslovakian State:
"Insbesondere nach dem Urteil des BGH vom 11.04.1960 (BGHZ
32, 170, 172 j) reicht es zur Anwendung der Bestimmung des Teil
VI Art. 3 Überleitungsvertrag aus, daj3das Verm6gen als deutsches - 65-
VermOgen beschlagnahmt worden sei." (page 20 of the judgment of
the Court of Appeal)
Translation:
"In particular in accordance with the judgment of the Federal Court
of Justice dated April 11 1960 (BGHZ - Amtliche Entscheidungs
sammlung des BGH in Zivilsachen - 32, 170, 172 f), it will be suf
ficient for the application of Article 3 Chapter Six Sertlement Con
vention that the assets were seized as German assets." (page 18 of
the translation)
3.21 At the same time the Regional Court of Cologne rejected an application by the
Plaintiff for a stay of the proceedings until the competent administrative courts
had reached a final decision on a compensation claim pursuant to the legisla
tion conceming lasses due to reparations, on the ground of such a claim was
the corollaryof the Regional Court of Cologne's ruling. In accordance with that
legislation, German citizens have a right to be compensated for losses or dam
age suffered in connection with reparation measures affecting their property.
However, the Regional Court of Cologne held that none of the prerequisites for
compensation under that legislation were fulfilled in the case under considera
tion. On page 16 of its judgment, the Court stated:
"Lastenausgleichsansprüche des Kliigers bestehen niimlich unab
hiingig von der Frage, ob er deutscher VolkszugehOriger im Sinne
des § 230 a LAG ist, nicht. Ansprüche bestehen niimlich gemiij3
§ 230 Abs. 1 LAG nur dann, wenn der Geschiidigte am 31.12.1952
seinen stiindigen Aufenthalt im Geltungsbereich des Grundgesetzes
oder in Berlin (West) hatte. Dies trifft jedoch for den Kliiger bzw.
seinen Vater ojjènsichtlich nicht zu."
Translation:
"... independent of the question of whether or not the Plaintif[ is
"deutscher VolkszugehOriger" (of German ethnie origin) within the
meaning of Section 230(a) LAG-Lastenausgleichsgesetz (Equalisa
tion of Burdens Act), the Plaintiff is not entitled to daim equalisa
tion of burdens. And this is so, because according to Section 230
paragraph 1 LAG, the person who suffered the Joss is only entitled
to raise such a claim if he bad his permanent residence within the
territoryof application of German Basic Law or in Berlin (West)
on December 31 1952. However, this is obviously not the case as - 66-
far as the Plaintiff or his father are concerned." (page 14/15 of the
translation)
3.22 The Regional Court of Cologne also rejected as unfounded the Plaintiffs ar
gument that the measures effected on the basis of the Decree No. 12 of12 June
1945 had not been reparation measures directed against German assets, but
rather measures of a punitive character - as the wording of the Decree's pream
ble clearly shows.
3.23 The Court of Appeal Cologne considered it to be undeniable that the seizure of
the painting was effected as a result of a state of war and for the purpose of
reparations within the meaning of Article 3 (1) and (3) of Chapter Six of the
Settlement Convention:
"Die Beschlagnahme des Gemiildes erfolgte auch aufgrund des
Kriegszustands zu Zwecken der Reparation im Sinne des Teiles VI
Art. 3 Abs. 1, 3 Überleitungsvertrag." (page 25 of the decision)
Translation:
"The seizure of the painting was also effected because of the state
of war and for the purpose of reparation measures within the mean
ing of Article 3 paragraph 1 and 3 of Chapter Six Settlement Con
vention." (page 21 of the translation)
3.24 During the oral hearings before the Court of Appeal of Cologne, both the
Czech Republic and Hans-Adam II argued that the Bene$ Decree No. 12 was
not a reparation measure. The Court, however, gave its own interpretation of
Bene$ Decree No. 12, categorising the measures taken under it as reparation
measures against German extemal assets. In its reasoning on this point, the
Court invoked a statement made by President BeneS in 1944:
"Das VermOgen der betroffenen Personen wurde ais FeindvermO
gen eingezogen und sol/te den iuj3erungen des Staatsprèisidenten
Benes zufolge ais "Vorschuj3 auf die Reparation gegenüber dem
Deutschen Reich" dienen (zitiert bei Raschhofer in FS von der
Heydte, 495, 511)." (page 25 ofthejudgment) - 67-
Translation:
"The assets of the persons concemed were confiscated in their ca
pacity as enemy assets and, according to President BeneS' com
ments it was meant to serve as "VorschujJauf die Reparation
gegenüber dem Deutschen Reich" (an advance on the reparation
vis-à-vis the German Reich) (cited by Raschhofer in Festschrifl von
der Heydte, pages 495, 511)." (page 22 of the translation)
On page 22 of the decision the Court stated also:
"Unmafigeblich fiir die streitgegenstiindliche Rechtsfrage ist
schliefilich auch die gegenwiirtige Rechtsauffassung des tschechi
schen Staates."
Translation:
"And, finally, with respect to the matter at issue, the present legal
opinion of the Czech State is of no importance either." (page 19 of
the translation)
3.25 In its decision dated 25 September 1997 (Annex 30), the highest German court
for civil matters, theBundesgerichtshof (hereafter "Federal Court of Justice"),
finally confirmed to îts full extent thejudgment delivered by the Court of Ap
peal of Cologne.
2. The Decision of the Bundesverfassungsgericht
(Federal Constitutional Court) of 14 January 1998
3.26 On 30 October 1997, Hans-Adam II filed a constitutional complaint against the
Federal Court of Justice's decision of 25 September 1997 before the Federal
Constitutional Court in Karlsruhe. Hans-Adam II argued that the Exchange of
Notes of27/28 September 1990, in which the signatories agreed to keep part of
the Settlement Convention in force, should actually have been ratified by the
German Parliament. Furthermore, he complained in respect of a violation of in
ternational law, intemationallaw being direct!y applicable as German law pur
suant to Article 25 of the German Basic Law. He argued that it was not possi- -68-
ble on any ground to regard Liechtenstein property as German external assets
within the meaning of the Seulement Convention. Concurrently, he filed a mo
tion for an interlocutory arder against the Federal Court of Justice's decision in
arder to prevent the return of the Pieter-van-Laer painting to the Czech Repub
lic prier to the conclusion of the proceedings pending before the Federal Con
stitutîonal Court.
3.27 In its decision dated 26 November 1997 {Annex 31), the Federal Constitutional
Court made the interlocutory arder as requested and prohibited the sequestrator
from returning the painting to the Czech Republic. This decision was excep
tional, indeed, in Germany's previous hîstory, because, as a rule, the Federal
Constitutional Court does not make interlocutory orders against the Federal
Court of Justice in its capacity as the highest court in civil matters. Such an or
der is made only if- after an initial look to the case - the Court considers it
likely that the constitutional appeal will succeed on the merits, because it
seems evident that the Federal Court of Justice's decision was unconstitutional.
3.28 However, on 28 January 1998 the Federal Constitutional Court issued a final
decision (Annex 32) rejecting the Applicant's constitutional complaint. Stating
the reasons for their decision, the judges of the Constitutional Court agreed
with the line of argument adopted by the civil courts. However, the Court pre
sented an additional argument in holding that, where an original law of the
Three Powers bad existed in Germany, that law could legitîmately be extended
to the territory of the former German Democratie Republîc by a simple ex
change of letters and without participation of the German Parliament - as was
the case with the Exchange of Notes of27/28 September 1990.
3.29 In addition, the Court not only applied the inadmissibility rule of Article 3 (3),
but also the non-objection rule of Article 3 (1) ofChapter Six of the Settlement
Convention and declared that where the requirements of Article 3 (1) of Chap
ter Six of the Settlement Convention are fulfilled - as was the case here - the -69-
German courts were not only obliged to dismiss claims before them, but Ger
many was also prohibited from raising objections against such measures car
ried out by the Three Powers and ether allied countries.
3.30 The Federal Constitutional Court confinned the civil court's opm10n that
Liechtenstein property feil within the scope of the Settlement Convention. In
the Court's view it was not arbitrary for the civil courts to rely upon the classi
fication of Liechtenstein assets as German externat assets by the expropriating
State. In this connection, the Court resorted to the purpose of the Settlement
Convention and accepted the civil court's view on this point. It held that the
question ofwhether or not any specifie property was to be classified as German
external assets within the meaning of Article 3 (1) of Chapter Six of the Set
dement Convention was a matter exclusively within the competence of the ex
propriating State.
3. Statements of the Municipality of Cologne
3.31 The Municipality of Cologne - the local German authority responsible for the
Wallraf-Richartz-Museum - was the defendant in the Pieter-van-Laer case.
However, at the earliest stage, when the case was brought before the Regional
Court of Cologne, the Munîcipality of Cologne served a third party notice on
the Brno National Historical Monuments Office and demanded that the latter
should replace them as a party to the action, because the Municipality of Co
logne had no economie interest in the matter, while the National Historical
Monuments Office was the lender of the painting. The Brno National Hîstorical
Monuments Office joined the action in support of the Municipality of Cologne,
but did not replace the Municipality as defendant. It merely acted as a third
party intervener against the Applicant. Pursuant to Section 67 of the German
Code of Civil Procedure, any pleadings used by the intervener to defend his
position orto raise objections are attributable to the defendant unless they con
tradict the defendant's own declarations and actions. -70-
3.32 In the course of the lawsuit, and in particular before the Regional Court of Co
logne, the Brno National Historical Monuments Office made a number of
statements related to the Principality of Liechtenstein's alleged lack of sover
eignty and to the allegation that Liechtenstein was part of the German nation.
3.33 For example, in its capacity as intervening third party in support of the Munici
pality of Cologne, the Brno National Historical Monuments Office inter alia
made the following assertions: (a) itwas and has been generally known that
Liechtenstein natîonals belong to the German people; (b) residents of Liechten
stein are Catholîc Germans, and (c) the Regional National Committee in Olo
mouc correctly declared that the Head of State of the Principality of Liechten
stein was a person belonging to the German people, which was generally
knov.rn,and that he consequently was a member of the group of persans whose
property could be expropriated in accordance with Section 1 (1 a) of Decree
No. 12 (Annex 6).
3.34 The lawyers representing the Applicant before the court at the time expressly
asked the Municipality of Cologne to contradict this argument (Annex 33), but
the Municipality of Cologne as principal defendant failed to do so and accepted
the argument put forward by the intervener, the Brno National Historical
Monuments Office (Annex 34). In these circumstances, the intervener's state
rnents may be attributed to the Municipality of Cologne pursuant to Section 67
of the German Civil Procedure Law.
3.35 In the belief that the Municipality of Cologne's position was unlikely to have
been shared by the Government of the Federal Republic ofGermany, the Gov
emment of the Principality of Liechtenstein instructed its Ernbassy in Bem to
present an aide-mémoire to the German Arnbassador Heyken on 4 October
1995 (Annex 35). Referring to the Municipality of Cologne's conduct in its ca
pacity as a local authority forming part of the Federal Republic of Germany - 71 -
and therefore subject to the legal oversight of the Land of North-Rhine West
phalia as far as questions of the legality of administrative acts are concerned,
the Liechtenstein Government asked the following questions:
"1. Entspricht die von der Stadt KOln mittelbar eingenommene
Haltung auch der Aujfassung der Bundesrepublik Deutschland?
2. Sol/te die Haltung der Stad! KO!nnicht der Auffassung der
Regierung der Bundesrepublik Deutschland entsprechen, welche
MOglichkeiten gibt es, auf die Stadt KO/n einzuwirken, von derarti
gen rechtsverbindlichen Erklârungen mit weitreichenden Konse
quenzen auch auf das Verhiiltnis zwischen dem Fürstentum Liech
tenstein und der Bundesrepublik Deutschland im Hinblick auf die
Reparations/rage abzusehen, um ein einheitliches Bild in der au
fienpolitischen Haltung der Bundesrepublik Deutschland gegen
über dem Fürstentum Liechtenstein wiederherzustellen?"
Translation:
"1. Does the position indirectly taken by the Municipality of Co
logne correspond to the position taken by the Federal Republic of
Germany?
2. In the event that the position of the Municipality of Cologne
does not correspond to the point of view supported by the Govem
ment of the Federal Republic of Germany, what possible means are
available to influence the Municipality of Cologne to the effect that
the latter will refrain from rnaking such declarations of a legally
binding nature wh:ichare bound to have far-reaching consequences
for the relationship between the Principality of Liechtenstein and
the Federal Republic of Germany also with respect to the reparation
issue, and in arder to restore the Federal Republic of Germany's
consistent attitude vis-à-vis the Principality of Liechtenstein with
regard to foreign affairs?"
3.36 The German Ernbassy took delivery of the aide-mémoire of 4 October 1995,
but the Ambassador of the Principality of Liechtenstein was advised only in
Decernber 1995 that the contents of the aide-mémoirebad been brought to the
attention of the responsible court, but that those contents had not been consid
ered as having any relevance for the court's decision. -72-
4. Statements of the German Government before
the European Court of Human Rights
3.37 The Municipality of Cologne's attitude in the Pieter-van-Laer case reflected a
major change in Gennany's position. This was particularly evident in the sub
mission of the Agent of the Govemment of the Federal Republic of Gennany
in the context of the action for violation of human rights brought before the
European Court of Human Rights in Strasbourg by Prince Hans-Adam II of
Liechtenstein.
3.38 Following the decision of the Federal Constitutional Court of28 January 1998
(Annex 32), in which the constitutional complaint of Prince Hans-Adam II of
Liechtenstein was dismissed, Hans-Adam II filed an individual application to
the European Court ofHuman Rights on 8 June 1998. He based his application
on the fact that his human rights bad been violated by the decision of the Ger
man courts and also by the Munîcipality of Cologne's refusai to return the
Pieter-van-Laer painting to him. He asserted in particular a violation of Article
6 (1) of the European Convention for the Protection ofHuman Rights and Fun
damental Freedoms (deniai of justice). In addition, he complained of a viola
tion of Article 1 of the First Protocol to this Convention and Article 14 of this
Convention in conjunction with Article 1(1) of the First Protocol.
3.39 In a statement dated 29 October 1999 (Annex 36), in response to the applica
tion, the Agent of the Federal Republic of Germany also invoked the decision
of the Administrative Court in Bratislava of 21 November 1951 (Annex 9). He
adopted the principal arguments on which the Administrative Court in Brati
slava bad based îts decision, namely that the Reigning Prince of Liechtenstein
in his capacity as the Head of State of Liechtenstein was to be regarded as a
person of German nationality on the grounds that this was a fact that "allseitig
bekannt war und ist" (official translation of Germany: "was and is generally
known"). Referring to this decision of the Administrative Court in Bratislava, - 73-
the Agent of the Govemment of the Federal Republic of Germany considered
that:
(Es ist)''jedenfalls nicht willkürlich und vertretbar, wenn die deut
schen Gerichte davon ausgingen, daft das VermOgen als deutsches
VermOgen beschlagnahmt worden sei. Artikel 3 des VI. Teils des
Überleitungsvertrags wird vom Beschwerdeführer zu eng ausge
legt, wenn er deutsches AuslandsvermOgen mit dem VermOgen
deutscher StaatsangehOriger gleichsetzt." (page 14 of the reply)
Official Translation of German y:
"With respect to these reasons, it is at !east not arbitrary and it is
defensible if the German courts proceeded on the assumption that
the property was seized as German property. Article 3 of Chapter
Six of the Settlement Convention is interpreted too narrowly by the
Applicant if he equates German extemal assets with the assets of
German citizens." (page 14 of the translation)
3.40 Furthermore, the Agent of Germany clearly pointed out in his pleading that he
considered Liechtenstein cîtîzens to be "deutsche VolkszugehOrige" (persans
belonging to the German "people"). In his view, Liechtenstein citizens are to be
regarded as "Gennans" in the ethnie rneaning of the term. In this context he al
leged that the Principality of Liechtenstein bad formed part of the Habsburg
Empire, another point on which the Agent of Germany was in errer, as this was
never the case.
3.41 This opinion was expressly confirmed by the Agent of Germany in his oral
pleading before the European Court ofHuman Rights on 31 January 2001. He
declared that the 1951 decision of the Administrative Court in Bratislava was
defensible. He argued that the relevant issue was not citizenship but "Volks
zugehOrigkeit" (belonging to the German "people"). Therefore - in the opinion
of the Agent of Germany- it is a natural corollary to include Liechtenstein citi
zens among those who can be regarded as "deutsche VolkszugehOrige" (persans
belonging to the German "people"), like the so-called "Sudetendeutsche"
(Germans from Sudetenland), because they speak a German language and be- - 74-
longed to the Habsburg Reich and consequently - according to Germany's as
sertion- are part of the "deutscher Kulturkreis" (German cultural community).
5. Diplomatie correspondence and bilateral consultations
3.42 Responding to the first signs ofGermany's imminent change of position, which
Liechtenstein found increasingly difficult to understand, Liechtenstein ex
changed several diplomatie notes with Germany and also initiated two bilateral
consultations between Liechtenstein and German government delegations. It
became apparent that the fundamental change in Germany's position was not
restricted to the Pieter-van-Laer painting, but extended to the entirety Liech
tenstein property located in the tenitoryf the Czech Republic.
3.43 Not having received any satisfactory reply to its aide-mémoire of 4 October
1995, the Government of the Principality of Liechtenstein felt obliged to con
suit the Govemment of the Federal Republic of Germany in connection with
the "German Czech Declaration on Mutual Relations and their Future Devel-
opment" signed by the Government of the Federal Republic of Germany and
the Government of the Czech Republic in Prague on 21 January 1997 (Annex
37). In its diplomatie note of 5 May 1997 (Annex 38), the Government of the
Principalityof Liechtenstein stated:
"Unter Bezugnahme auf die am 21.01.1997 in Prag von der Regie
rung der Bundesrepublik Deutschland und von der Regierung der
Tschechischen Republik unterzeichneten "Deutsch-Tschechische
Erkltinmg über die Gegenseitigen Beziehungen und deren künftige
Entwicklung", nach deren Ziff. IV "beide Seiten darüber einstim
men, dass das begangene Unrecht der Vergangenheit angehOrt"
und dass '')edeSeite ihrer Rechtsordnung verpjlichtet bleibt und
respektiert, dass die andere Seite eine andere Rechtsauffassung
hat" ist es der Regierung des Fürstentums Liechtenstein ein Be
dürfnis festzuhalten, dass diese Deutsch-Tschechische Erkltirung
die Rechte des Fürstentums Liechtenstein sowie die Rechte seiner
StaatsangehOrigen im Hinblick auf die v6lkerrechtswidrige Enteig
nung /iechtensteinischen VermOgens durch die tschechos/owaki- -75-
sche Regierung nicht berührt, obwohl diese Enteignungen unter
dem Tite! "volksdeutsches Vermbgen" oder "deutsches Auslands
vermOgen" erfolgt sind."
Translation:
"With reference to the "Deutsch-Tschechische Erkltirung über die
Gegenseitigen Beziehungen und deren künftige Entwicklung"
(German Czech Declaration on Mutual Relations and their Future
Development) signed by the Govemment of the Federal Republic
of German y and the Govemment of the Czech Republic in Prague
on January 21, 1997, and subparagraph IV thereof, pursuant to
which "beide Seiten darüber übereinstimmen, dass das begangene
Unrecht der Vergangenheit angehOrt" (both sides agree that the
wrongs committed shall be a matter of the past) and that '')edeSeite
ihrer Rechtsordnung verpjlichtet bleibt und respektiert, dass die
andere Seite eine andere Rechtsauffassung hat" (each side remains
committed to its legal order and respects that the ether side has a
different legal position), its the desire of the Government of the
Princîpality of Liechtenstein to emphasise that this German Czech
Declaration will not affect the rightsof the Principality of Liech
tenstein and the rightsof her citizens with regard to Liechtenstein
assets which were expropriated by the Czechoslovakian Govem
ment contrary to international law, in spite of the fact that such ex
propriations were effected under the heading of "volksdeutsches
Verm6gen" (ethnie German assets) or "deutsches Auslandsver
mOgen"(German extemal assets)."
3.44 In rep1ythereto, the Federal Government had its Embassy in Bem declare in a
procès-verbal of 10 June 1997 (Annex 39):
"Bei der deutsch-tschechischen Erkliirung über die gegenseitigen
Beziehungen und deren künflige Entwicklung vom 21. Januar 1997
handelt es sich um eine bilaterale politische Erkliirung, die die
Rechte dritterStaaten und deren AngehOriger nicht berührt.
Was im übrigen die Frage deutscher vermOgensrechtlicher An
sprüche betrifft, ist mit der Erkiiirung keine Aufgabe von Rechtspo
sitionen verbunden. Es wird im Gegenteil ausdrücklich eine Unter
schiedlichkeit der Rechtsauffassungen zwischen beiden Staaten
festgehalten, wie in Ziffer IV der Erkliirung zum Ausdruck kommt,
warin es heij3t "... wobei jede Seite ihrer Rechtsordnung verpjlich
tet bleibt und respektiert, dass die andere Seite eine andere
Rechtsauffassung hat"." - 76-
Translation:
"The Gennan-Czech Declaration with Respect to the Mutual Rela
tions and their Future Development dated 21 January 1997 is a bi
lateral political declaration which does not affect the rights ofthird
States and their nationals.
As far as the question of Gennan claims with respect to property
rights is concerned, this Declaration is not coiUlected with any
waiver of legal positions. On the contrary, the difference in the le
gal opinions of both states is express!y set out, as expressed in item
IV of the Declaration, which reads "... while each side remains
committed to its legal order and respects that the ether side has a
different legal position"."
3.45 This point ofview expressed by the German government in their procès-verbal
of 10 June 1997 reflected the position Germany had taken over several dec
ades, namely to consider all measures taken by the Allies against German ex
tema! assets as contrary to international law. It also corresponded to the point
of vîew expressed by the then Chancellor of the Federal Republic of Germany,
Dr. Helmut Kohl, in his letter of 14 January 1997 (Annex 40) to the effect thal
Germany has not yet recognized Czechoslovakia's measures directed against
the Liechtenstein property and others. The Chancellor pointed out in his letter
addressed to the Reigning Prince Hans-Adam II of Liechtenstein:
"Die deutsch-tschechische Gemeinsame Erkliirung wird im übrigen
keinerlei Einfluj3auf diesen Rechtsstreit haben, da sie Rechtsfragen
im Zusammenhang mit Enteignungen in der damaligen Tschecho
slowakei offenhiilt."
Translation:
"As far as the German Czech Joined Declaration is concemed, it
will not have any influence on this lawsuit, because it Jeaves open
the questions in connection with expropriations in the then Czecho
slovakia."
3.46 However, by this letter, the Government of German y contradicted the rulings
of the civil courts in Cologne, which already had been delivered by the date of
the letter. In their rulings, the courts had applied Article 3 ofChapter Six of the
Settlement Convention to Liechtenstein property located in the Czech Repub- - 77-
lie, thereby expressly settling for good the issue of Allied confiscation meas
ures. After the Exchange of Notes dated 27/28 September 1990, Article 3 of
Chapter Six of the Settlement Convention was no longer a temporary measure
pending the conclusion of a peace treaty, but bad now become definitive and
final, and this final characterf Article 3 deprived Germany of the chance to
raise substantive objections at any pointof time against measures govemed by
Article 3 of Chapter Six of the Settlement Convention. As a result, the German
courts bad not left the property issue open, but had come to a final settlement
on the point, with the result that ali persons concemed bad lost their title of
ownership.
3.47 After the Federal Constitutional Court failed to contradict the point of view
taken by the civil courts, the Govemment of the Principality of Liechtenstein
turned to the Govemrnent of the Federal Republic ofGermany and referred to
the fact that Liechtenstein property bad been included in the post-war repara
tions regime contrai)' to international law and asking for a meeting on a diplo
matie level.In îts aide-mémoire of3 June 1998 (Annex 41), sent to the Foreign
Office of the Federal Republic of Germany, the Principality of Liechtenstein
expressed its doubts as to whether Gerrnany's position was in conformity with
international law and stated that it could not accept the legal injury caused
thereby.
"Die Entscheidung des Bundesverfassungsgerichts der Bundesre
publik Deutschland vom 28. Januar 1998 in dem Verfahren über
die Verfassungsbeschwerde S.D. Fürst Hans-Adam Il. von und zu
Liechtenstein (2 BvR 1981197) wirfl nach übereinstimmender An
sicht der von der Regierung des Fürstentums Liechtenstein konsul
tierten Experten erhebliche Zweifel bezüglich ihrer Vereinbarkeit
mit dem Vôlkerrecht auj Die vom Bundesverfassungsgericht prak
tizierte "zweckorientierteAuslegung" des Artikels 3 Absiitze 1 und
3 des VI. Abschnitts des sogenannten Überleitungsvertrags von
1954 liiuflim Ergebnis darauf hinaus, das Fürstentum Liechten
stein und liechtensteinische StaatsangehOrige in die Reparations
und Kriegsschadensregelung der Bundesrepublik Deutschland ein
zubeziehen, ohne dass es hierfor irgendeinen Zurechnungszusam- - 78-
menhang giibe. Das verletzt gleichermajJen vOlkerrechtlich garan
tierte Rechtspositionen des liechtensteinischen Staatsoberhauptes
wie des Staates Liechtenstein selbst.
Die Regierung des Fürstentums Liechtenstein bitte! daher um Ver
stiindnis dafiir, dass sie, bei aller Anerkennung der Unabhiingigkeit
der Gerichte, die entstandenen Rechtsbeeintriichtigungen nicht
hinnehmen kann.
lm Interesse einer kooperativen undfreundschaftlichen ErOrterung
der mit der erwiihnten Entscheidung des Bundesveifassungsge
richts entstandenen Situation und der sich aus ihr ergebenden Fra
gen sollten daher mOglichst umgehend Gespriiche auf diplomati
scher Ebene unter EinschlujJvon Experten stattjinden."
Translation:
"Legal experts consulted by the Government of the Principality of
Liechtenstein concur in the opinion that the decision of the Federal
Constitutional Court of the Federal Republic of Germany of 28
January 1998 in the proceedings concerning the constitutional
complaint filed by HSRH Prince Hans-Adam II of Liechtenstein
(2 BvR 1981/97) gives rise to considerable doubt as to whether
such decision is compatible with international law. In the last
analysis, the "purpose-oriented interpretation" of Article 3 para
graph 1 and 3 of Chapter Six of the so-called Settlement Conven
tion of 1954 amounts to an inclusion of the Principality of Liech
tenstein and Liechtenstein citizens into the Federal Republic of
Germany's settlement of reparations and damages caused by the
war, even though there is no reason whatsoever to establish such a
link. This constitutes a violationof the legal status guaranteed by
virtue of international law beth with respect to the Liechtenstein
Head of State and the State of Liechtenstein itself
The Government of the Principality of Liechtenstein therefore asks
you to understand that, regardless of its recognition of the inde
pendence of courts, they cannet accept the legal injury caused
thereby.
In the interest of a cooperative and friendly discussion of the situa
tion created by the above-described decision of the Federal Consti
tutional Court and the questions arising as a result thereof,alk.son
a diplomatie leve! should be held as soon as possible with the par
ticipation of experts." - 79-
3.48 Following this aide-mémoire, two consultations took place between German
and Liechtenstein government delegations. They were held on 10 July 1998 in
Bonn and on 14 July 1999 in Vaduz.
3.49 During the first consultation in Bonn, the Liechtenstein delegation expressly
asked whether German y agreed with the interpretation of the Federal Constitu
tional Court to the effect that, even where Liechtenstein's neutra! property was
concerned, German courts were prohibited by the Settlement Convention from
deciding on the lawfù.lness of confiscation measures canied out against Ger
man externat property if the confiscations had been carried out to meet German
reparation obligations.
3.50 The German delegation replied that the German Executive bad taken cogni
sance of the decision of its supreme court. They said they were bound by that
In ali other
decision and it would also be bound in relation to any future cases.
respects, Germany was unable to see that the decision of the Federal Constitu
iional Court could amount to a violation of rights of the State of Liechtenstein.
Nor were there any delicta juris gentium involved for which Germany would
be liable vis-à-vis Liechtenstein.
3.51 In preparation for the second round of bilateral consultations, Liechtenstein
sent in advance a listof questions (Annex 42) intended to serve as a framework
for discussions at the second round:
11. Teilt die neue Bundesregierung die Rechtsansicht ihrer Vor
gtingerin, dass aufgrund einer zweckorientierten Auslegung von
Teil VI Art. 3 Abs. 1 und 3 des Überleitungsvertrages (Vertrag zur
Regelung aus Krieg und Besatzung entstandener Fragen ... BGB!.
1955 IIS. 405) unter "Mafinahmen gegen das deutsche Auslands
vermdgen" alle Mafinahmen verstanden werden, die nach der In
tention des handelnden Staates gegen deutsches VermOgengerich
tet waren und demgemtifi die Tschechoslowakei 1945 auch das
Vermbgen von Bürgern des im Zweiten Weltkrieg neutralen Für- - 80-
stentums Liechtenstein zum Zwecke der Reparation konjiszieren
durfte?
2. Ist sich die Regierung der Bundesrepublik Deutschland be
wuftt, daj3 die Bundesrepublik Deutschland gemiift Art. 5 Überlei
tungsvertrag grundsiitzlich verpjlichtet war, die Eigentümer der
Werte, die aufgnmd der in Art. 3 Überleitungsvertrag bezeichneten
MafJnahmen beschlagnahmt worden sind, zu entschtidigen, und daj3
der dem Grunde nach bestehende, vom Bundesveifassungsgericht
ers! durch BeschlujJ vom 28. Januar 1998 tatbestandsmtij3igfestge
stellte Entschiidigungsanspruch betroffener liechtensteinischer
Bürger von der Aujhebung des Art. 5 Überleitungsvertrag durch
den Notenwechsel vom 27.128.09.1990 (BGBI. 1990 II S. 1387)
nicht berührt wurde und nicht berührt werden konnte?
3. Teilt die Regierung der Bundesrepublik Deutschland den von
dem Bundesgerichtshof wie auch vom Bundesverfassungsgericht
nicht beanstandeten Rechtsstandpunkt des LG!OLG K6ln (Az: 5 0
182/92/22 U 215195- Urtei/ vom 09.07.1996}, dass die bis data
ge/tende deutsche innerstaatliche Rechtsordnung den betroffenen
Bürgern Liechtensteins zu keinem Zeitpunkt eine Art. 5 Überlei
tungsvertrag adiiquate Entschddigung einriiumte? Wie wird die
Bundesregierung diese Diskriminierung gegenüber anderen
Kriegsfolgegeschiidigten ausgleichen?
4. Durch eine Reihe von v6lkerrechtlichen Vertriigen mit den im
Zweiten Weltkrieg neutra/en Staaten hat die Bundesrepublik
Deutschland sichergestellt, daj3 deren AngehOrige nicht unter
Kriegsfolgen zu leiden haben, für die der Angriff Deutschlands auf
seine Nachbarstaaten kausal war und ist.
Vgl. z.B. die Abkommen mit der Schweiz (BGBl. 1953 II S. 15), mit
Schweden (BGBI. 1956 II S. 811), mit Spanien (BGBI. 1959 Il S.
245) und mit Portugal (BGBI. 1959 II S. 264)
Ist die Bundesregierung bereit, im Geiste der genannten Vertriige
und in der Erkenntnis, dass der Notenwechsel vom 27.128.09.1990,
die Entscheidung des Bundesverfassungsgerichts vom 28.01.1998
und die deutsch-tschechische "Schlusserkliirung" vom 08.03.1999
nunmehr die das Fürstentum treffenden Kriegsfolgeschiiden end
gültig frxiert haben, auch mit Liechtenstein einen gerechten Aus
gleich zu vereinbaren?" - 81 -
Translation:
"1. Does the new German Govemment share the legal opinion of
its predecessor that on the basis of a purpose-oriented interpretation
of Article 3 paragraph 1 and 3 of Chapter Six Settlement Conven
tion (Convention on the Settlement of Matters Arising out of the
War and the Occupation ... BGB/. [Bundesgesetzblatt- Federal Law
Gazette] 1955 II p 405) the term "measures carried out with regard
to German extemal assets" is to be understood to include ali meas
ures directed against German property in accordance with the in
tention of the acting State, and that, consequently, in 1945, Czecho
slovakia was entitled to confiscate for the purpose of reparations
also the assets of citizens of the Principality of Liechtenstein which
was neutra! in World War II?
2. Is the Govemment of the Federal Republic ofGennany aware
of the fact that pursuant to Art. 5 Settlement Convention, the Fed
eral Republic of Germany was in principle obliged to compensate
the owners of assets which bad been seized on the basis of the
measures specified in Art. 3 Settlement Convention, and that the
compensation claim of Liechtenstein citizens affected hereby - a
daim which bas existed on the merits, but was established in rec
ognition of the facts by the decision of the Bundesverfassungs
gericht [Federal Constitutional Court] no earlier than on January
28, 1998 - was not affected and could not be affected by the abro
gation of Art. 5 Settlement Convention by means of the exchange
of notes dated September 27/28, 1990 (BGBI. 1990 II p 1387)?
3. Does the Govemment of the Federal Republic of Gennany
share the view of the LG/OLG K6ln
[Landgericht/Oberlandesgericht K6ln - Regional CourtJCourt of
Appeal Cologne] (refNo: 50 182/92/22 U 215/95- Judgment of
July 9, 1996)- a view that bas not been contradicted neîther by the
Bundesgerichtshof [Federal Court of Justice] nor by the Federal
Constitutional Court - that the German national legal arder applica
ble to date bad at no point in time granted adequate compensation -
in terms of Article 5 SeUlement Convention - to Liechtenstein citi
zens affected in this context? How will the Federal Govemment
even out such a treatment that is discriminating in comparison to
ether persans who suffered }ossesas a result of the war?
4. By means of a number of international treaties with States
that were neutral during World War II, the Federal Republic of
Germany ensured that their natîonals will not have to suffer such
}osses as a result of the war which were and are caused by Ger
many's attack on ber neighbouring States. -82-
Cf eg the treaties with Switzerland (BGBI. 1953 II p 15), with Swe
den (BGBI. 1956 II p 811), with Spain (BGBI. 1959 II p 245) and
with Portugal (BGBI. 1959 II p 264)
Is the Federal Govemment prepared also to agree on a just sertie
ment with Liechtenstein, in the spirit of the above-mentioned trea
ties and in recognition of the fact that the exchange of notes ofSep
tember 27/28, 1990, and the German-Czech "final declaration" of
March 8, 1999, have new finally fixed such !osses resulting from
the war that have been suffered by the Principality?"
3.52 In the course of the second consultation, the German delegation gave precise
answers to sorne of these questions, while ether questions were answered in a
sununary manner.
3.53 With respect to the first question, Germany stressed that the Federal Govem
ment bad to accept the result of the proceedings before German courts as bind
ing for the future. In addition, the German delegation stated that the Federal
Govemment bad to accept the ruling of its supreme court. This decision would
be attributable to Germany under international law.
3.54 Wîth respect to questions 2 and 3, the German delegation read out an official
statement of the Ministry of Finance which had been contacted in advance - as
bad the Ministry of Justice and the Chancellor's Office - to agree on a con
certed position. According to the Ministry of Finance's statement, Article 5 of
Chapter Six of the Settlement Convention bad been deleted because the Ger
man Govemment was of the opinion that sufficient provision bad been made
for compensation of ail Gennan citizens concerned. Consequently, Gennany
bad consîdered Article 5 obsolete. When deleting that Article, the parties in
volved bad not been aware of the Liechtenstein property issue. In this context,
the Gennan delegation explained that Liechtenstein citizens could not claim
compensation by virtue of German domestic law. They bad to rely on the dip
lomatie protection of their home country in arder to enforce their daims. The
Principalityof Liechtenstein was free to have recourse to diplomatie means. - 83-
3.55 As regards question 4, the German delegation pointed out that Liechtenstein
bad also been included in the compensation agreement entered into with Swit
zerland at the time. However, it conceded that no payrnents had been made to
Liechtenstein under the agreement, because such agreement only covered the
confiscation of German assets in Liechtenstein. No such German property had
been confiscated in Liechtenstein.
3.56 Taking up the results of the consultations, Liechtenstein's Foreign Minister Dr.
Andrea Willi wrote to the German Foreign Minister Josef Fischer on 9 Decem
ber 1999 (Armex 43). The German Foreign Minister having refused to discuss
this matter with the Liechtenstein Foreign Minister in aninformai meeting dur
ing the OSCE Summit Meeting on 18/19 November 1999 in Istanbul, the
Liechtenstein Foreign Minister asked for an urgent appointment to talk about
the issue and achieve a solution. Enclosed with her letter of 9 December 1999
was an aide-mémoire (Annex 44) also dated 9 December 1999, setting out once
more the Principality ofLiechtensteîn's position and making renewed reference
to treaties in connection with consequences of war German y had already con
cluded with other countries having also been neutra! during World War IL The
Principalityof Liechtenstein declared:
"Die Regierung des Fürstentums Liechtenstein, das im Zweiten
Weltkrieg ebenfalls neutra/ war, bringt daher die E!Wartung zum
Ausdruck, daft die Regierung der Bundesrepub/ik Deutschland
auch im Fa// der jüngst betroffenen /iechtensteinischen Staatsan
gehOrigen in Verhand/ungen mit dem Zie/ eines gerechten Aus
g/eichs eintritt." (page 4 the aide-mémoire)
Translation:
"The Govemment of the Principality of Liechtenstein, a country
which had equally been neutra! during World War II, therefore ex
presses to its expectation, that the Government of the Federal Re
public of Germany will also commence negotiations in the matter
of the Liechtenstein citizens affected of late, with the objective to
reach a just compensation." (page 3 of the translation) - 84-
3.57 The Principality of Liechtenstein was all the more interested in a clarification
of the matter in due course, as the Czech Republic bad meanwhile expressly
adopted the ruling of the Gennan courts with respect to reparation confisca
tions as provîding a legal justification for its own position. The declarationsf
the Principality of Liechtenstein and the Czech Republic of 25/26 May 1999
made in this context on the occasion of the 7th OSCE Economie Forum in Pra
39
gue were also attached to the aide-mémoire.
3.58 However, the German Foreign Minister Josef Fischer declared in his letter of
20 January 2000 (Annex 45) that the Federal Republic of Germany refused to
enter into negotiations.In principle, the Goverrunent did not see any reason to
grant compensation for a loss of Liechtenstein property either. The Gennan
Foreign Minister said:
"vie/en Dank fiir Jhr Schreiben vom 9. Dezember 1999 und das
beigefügte Aide-mémoire. Die Bundesregierung teilt die darin ver
tretene Rechtsauffassung bekanntlich nicht. Auch nach erneuter
Prüfung der Sach- und Rechtslage sieht sie deshalb keine MOglich
keit, gegenüber dem Fürstentum Liechtenstein für die aufgrund von
Nachkriegsenteignungen in der ehemaligen Tschechoslowakei
erlittenen VermOgensverluste Kompensationsleistungen zu erbrin
gen."
Translation:
"Thank:you very much for your Ietter of 9 December 1999 and the
enclosed aide memoire. It is known that the German Government
does not share the legal opinion expressed therein. Even upon re
newed examination of the legal and factual position, they do not
see a possibilityto make compensation payments to the Principality
of Liechtenstein for lasses ofproperty suffered as a result ofpost
war expropriations in former Czechoslovakia."
Declaration of the Liechtenstein Delegation of25 May 1999 and the written reply of the Czech
Republic, Attacbmentso Annex 44 of this Memorial. - 85-
D. Decision to submit the dispute to the Court
3.59 Following the letter of 20 January 2000, the consultations between Germany
and Liechtenstein bad to be regarded as failed. Neither was German y prepared
to concede that its attitude towards Liechtenstein and Liechtenstein property
was contrary to international law nor was Gennany willing to accept any re
sponsibility for this behaviour in terrnsof compensation. Therefore, Liechten
stein decided to submit the dispute to the Court. - 87-
CHAPTER4
GERMANY'S FAILURE TO RESPECT LIECHTENSTEIN'S
NEUTRALITY AND SOVEREIGNITY - 88-
A. Overview
4.1 By virtue of its conduct in the period 1995 and subsequent! y, Germany violated
the rights of Liechtenstein. By declaring Liechtenstein property to be German
property, Germany failed to respect Liechtenstein's acknowledged status as a
neutral State during World War II, as well as infringing its sovereignty. Ger
many committed both these violations by the same conduct, i.e. by applying
the reparations regime to Liechtenstein property during this period.
40
4.2 The peace treaties concluded both after World War I and World War II, in
cluded provisions on the question of reparations by the defeated States. There
was no waiver of reparations arising from World War II in Europe, any more
than there bad been in 1919. The Peace Treaties concluded after World War II,
as weil as the regime conceming Germany which resulted from the Yalta and
Potsdam Conferences as weil as the Paris Agreement of 14 January 1946, im
posed a duty of reparations on the defeated States. Each of the Peace Treaties
actually concluded contained a section on "Reparation and Restitution" (for ex
41 42
ample Part V of the Peace Treaties with Bulgaria, with Hungary and with
43 44
Romania, Part N of the Peace Treaty with Finland, Part VI, Section I, of
45
the Peace Treaty with Italy ) which provided the duty to make reparations for
the losses caused to members of the Allied and Associated Powers by military
operations and by the occupation. A similar provision was contained in the
46
Peace Treaty with Japan of 1951.
The duty to make reparations was reflected in Article 297 i) of the Treaty of Versailles; see be·
low para. 5.37.
United Nations Treaty Series, No. 643.
United Nations Treaty Series, No. 644.
United Nations Treaty Series, No. 645.
United Nations Treaty Series, No. 746.
United Nations Treaty Series, No. 747.
United Nations Treaty Series, No. 1832. - 89-
4.3 No peace treaty as such was concluded with Germany. But no decision was
ever made to relieve Germany of its obligation to make reparations. The lead
ers at the Yalta Conference, speaking on behalf of the Allied nations, agreed on
exacting reparations from Gennany. Consequently, the Protocol that was ap
proved at the Yalta Conference (Armex 11) provided as follows:
"1. Germany must pay in kind for the lasses caused by ber to the
Allied nations in the course of the war. Reparations are to be re
ceived in the first instance by those countries which have borne the
main burden of the war, have suffered the heaviest lasses and have
organised victory over the enemy... "
Hence, it was clear that reparations would be sought from Germany. The duty
of reparations incumbent upon Germany was confirmed by the Paris Agree
ment of 14 January 1946 (Annex 13).
4.4 The mere fact that the Allies were only speaking on behalf of the Allied and
Associated Powers did not mean that they were excluding reparations owed to
neutrals arising from their status of neutrality during the War. lndeed, they
could not exclude this obligation of reparations to neutral States. Neither, of
course, did they entitle Germany to use neutral property (such as Liechtenstein
property) to meet its duty of reparations.
4.5 The position ofGermany taken in 1995 and subsequently denied that the Ger
man courts had jurisdiction over claims raised by Liechtenstein concerning the
property of Liechtenstein nationals who had become subject of measures on
account of their allegedly German status under the "BeneS Decrees" (Annexes
6, 7, 46). Germany sought to justify this deniai by claiming that the reparations
regime applied to Liechtenstein property, irrespective of Liechtenstein's neu
trality during the War. By declaring this property as being subject to the repara
tions regime and applying the legal consequences prescribed by that regime,
Germany treated the Liechtenstein property as property of a belligerent State, -90-
i.e. of Germany itself, and thereby breached its international obligation to re
spect the sovereignty and neutrality of Liechtenstein.
4.6 This new position of Gennany constitutes a breach of Liechtenstein's rights
arising out of its recognised status as a sovereign and neutral State during
World War IL The breach materialised in the inclusion of Liechtenstein prop
erty in the reparations regime for Gerrnany, and the treatment of Liechtenstein
nationals as nationals of a belligerent State.
B. Liechtenstein was a neutral State in World War II
4.7 As explained in Chapter 1, Liechtenstein's neutrality was established and gen
erally recognised during the War. 47That neutrality had an erga o11mes effect,
and was applicable vis-à-vis both Gerrnany and Czechoslovakia. There can be
no doubt as to the neutrality of Liechtenstein with regard to ali States involved
in the War. Correspondingly, Germany as a belligerent State was obliged tore
spect the neutrality of Liechtenstein during the War. In fact, ît respected Liech
tenstein neutrality at the time, and subsequent}y, until its change of position in
and after 1995.
4.8 However, at no stage was Germany freed from the obligation to respect the
status of Liechtenstein as a neutra} State during the War, and not to treat its
property as property taken by way of war reparations. The reparations regime
which Germany applied to Liechtenstein property was a result of the legal
status of Germany during World War II as the enemy of the Allied and Associ
48
ated Powers. It was only in 1995 and thereafter, i.e. more than fifty years af
ter the end of the hostilities, that Germany applied this regime to Liechtenstein
property. The decisive fact is that Gennany, in and after 1995, applied to
See above paras. 1.1 to 1.9.
See above paras 2.1 et seq. - 91 -
Liechtenstein property a regime which resulted from the status of Germany and
its allies as enemy countries during the War. In this regard, the application of
the reparations regime is conditioned by the status of the State concemed as a
belligerent rather than a neutral. But Liechtenstein was indisputably not a bel
ligerent during the War. On the contrary, its status as a neutral was expressly
recognized, including by Germany. Nor bas any State, including Germany,
ever argued that Liechtenstein violated its duty of neutrality, or that individuals
of Liechtenstein nationality acted in non-neutra} ways, so as to justify treating
their property as effective enemy property. It is for this reason that Gennany
bad to respect the status of neutrality of Liechtenstein in respect of any action
concerning the legal regime resulting from the War. This is a continuing obli
gation and applies to action taken at any time up to the present.
C. The law of neutrality
4.9 The law of neutrality is mainly embodied in the Convention respecting the
Rights and Duties of Neutra! Powers and Persans in Case of War on Land,
signed at The Hague, 18 October 1907, and the Convention conceming the
Rights and Duties of Neutra} Powers in Naval War, signed at The Hague, 18
49
October 1907 (Hague Conventions V and XIII). Germany is and at ali rele
50
vant times was party to the two Hague Conventions. These Conventions grant
the belligerent powers only limited rights to requisition or the use of neutral
property, i.e. property of a neutral State or its nationals (as long as the latter fall
within the definition of neutral persans). These rights include the right of bel
ligerent States to seize war materials or contraband destined for the enemy, and
certain rights relating to railway material according to Article 10 of Hague
Convention V. These rights constitute an exception to the general rule that the
property of neutral States and their nationals has to be respected even in times
Official Gazette of the Gennan Reich (Reichsgesetzblatt) 1910, pp. 107 et seq.
Official Gazette of the German Reich (Reichsgesetzblatt) 1910, p. 151 and p. 343. -92-
51
of war. These exceptions are to be narrowly construed. In no case do these
Conventions entitle a belligerent State to use neutra! property for the purpose
of meeting its reparation duties arising from damage caused during a war.
Hague Convention XIII !ikewise does not grant such a right.
4.10 Since Liechtenstein is not a party to the Hague Conventions, customary inter
national law conceming neutrality applies to the relations between Germany
and Liechtenstein. However, the Hague Conventions are generally viewed as
reflecting the existing customary international law on neutrality. This is evi
denced by reference to State practice, opinio iuris and judicial decisions.
4.11 For instance, the uniform Rules of Neutrality adopted by the Northern Coun
tries in 1938 are based on the principles of Hague Convention XIII. 52 Likewise,
the Swiss Federal Council stated in 1993 that
"les droits et les obligations existants entre les belligérants et les
Etats neutres dans le cadre d'un conflit armésont régispar le droit
de la neutralité. Ce droit s'est transformé au XIXe siècle en droit
coutumier et a étéen partie codifié dans deux conventions du 18
octobre 1907 signéeslors de la deuxième Conférence de la paix de
53
La Haye."
International judicîal practice confirms the customary nature of the rules em
bodied in the Hague Conventions. In Damage caused by Germany in the Por
tuguese Colonies in South Africa (1928), 54the arbitral tribunal based its deci
sion on Article 11 of Hague Convention V, although the Convention was not
applicable ratione personae in the circumstances of that case. Thus the Tribu-
Lotus case, 1927 PCIJ, Ser. A, No. 10, p. 18.
E. Castrén, The Present Law ofWar and Neutrality, Acad. Scientarum Fennicae, Helsinki, 1954,
pp. 436 et seq.E.Hambro, "Das Neutralitiitsrecht der nordischen Staat8Zeitschriftfür aus
liindischesffentliches Recht und V6lkerrecht 1938, pp. 445 et seq., pp. 468 et seq.
L. Caflisch, "La pratique suienematière de droit international public 194Revue suisse de
droit international et de droit européen 1994, pp. 597 et seq., p. 629.
ONRIAA, Vol. II, pp. 1013 et seq., p. 1027. -93-
nal considered Hague Convention V as reflecting customary international law.
In Atti/ià Regolo and Other Vessels (1945), the Sole Arbitrator held that the en
tire Hague Convention XIII was declaratory of custornary international law as
itstood in 1907. 55 In his separate opinion to the advisory opinion of this Court
on the Legal consequences for States of the continued presence of South Africa
in Namibia (South West Africa) notwithstanding Security Council resolution
276 (1970) of 21 Jrn1e1971, Judge Ammoun cited the Hague Conventions as
cornerstones of the "status of neutrality". 56
4.12 The core ofthe law ofneutrality undoubtedly forms part of general customary
international law. During the proceedings before this Court on the advisory
opinion conceming the Legality of the Threat or Use of Nuclear Weapons, a
number of govemments referred to the princip le of neutralîty. The Court con
firmed this view, since it found ...
"that as in the case of the principles ofhumanitarian law applicable
in armed conflict, international law Ieaves no doubt that the princi
ple of neutrality, whatever its content, which is of a fundamental
character similar to that of the humanitarian principles and rules, is
applicable (subject to the relevant provisions of the United Nations
Charter), to ail international armed conflicts, whatever type of
57
weapons might be used."
4.13 The customary international law of neutrality imposes duties on neutrals as
weil as the belligerent States. As Schwarzenberger puts it, the
"counterpart to the duty of the neutral Powers to safeguard their po
sition of neutrality and, in particular, to prevent their territories
G. Schwarzenberger ,nternational Law as Applied by International Courts and TribunaVoL
II, The Law of Armed Conjiîct, Stevens, London, 1968, p. 571.
Legal Consequences for States of the Continued Presence of South Africa in Namibia {South
West Africa) notwithstanding Security Council Resolution 276, 1970, Advisory Opinion of 21
June, l.C.J. Reports 1971, p. 93.
Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion of 8 July, I.C.J. Reports
1996, pp. 226 et seq., p. 261, para. 89. -94-
from being used as bases for hostile operations, is that ofbelliger
ents to respect the rights ofneutral Powers." 58
These rights of the neutra! States are already expressed in Article 1 of Hague
Convention XIII, according to which "belligerents are bound to respect the
sovereign rights of neutra! powers".
4.14 The basic and generally recognized duty in this regard is the duty of the bellig
erent State to respect a specifie status of the neutra! State, involving impartial
ity and neutrality. This duty is weil established. According to Oppen
heirn!Lauterpacht "the duties of belligerents are, in the first place, to act to
wards neutrals in accordance with their attitude of impartiality; and, secondly,
not ta suppress their intercourse, and in particular their commerce, with the en
emy". Asto the first mentioned duty, the authors continue that. ..
"the contents of the duty of belligerents to treat neutrals in accor
dance with the1r impartiality are so manifest that elaborate treat
ment is unnecessary. This duty excludes, in the first place, any vio
lation of neutral territory for military or naval purposes of the war,
and any interference with the legitimate intercourse of neutrals with
the enemy; and, second! y, the appropriation of neutral goods, con
traband excepted, on enemy vessels. On the other band, it includes,
in the first place, due treatment of neutra! diplomatie envoys ac
credited to the enemy and found on occupied enemy terr:itory; and,
second! y, due treatment of neutra! subjects and neutra! property on
enemy territory. "60
4.15 Thus there exists a rule of general international law according to which the
neutra! status has to be respected by every belligerent. Any breach of this duty,
G. Schwarzenberger, International Law as Applied by International Courts and Tribunals, Vol.
II,The Law of Armed Conflict, Stevens, London, 1968, p. 565.
Oppenheim!Lauterpacht, International Law, Vol. II, 7lhed., Longman, London, 1952, p. 674.
Ibid, p. 676. This view is confirmed by other authors, such as E. Castrén, The Present Law of
War and Neutrality, Acad. Scîentarum Fennicae, Helsinki, 1954, p. 488; G. Schwarzenberger,
International Law as Applied by International Courts and Tribunals, Vol. Il, The Law of Armed
Conjlict, Stevens, London, 1968, p. 583; and Ch. Rousseau, Le droit des conflits armeés,A. Pe
done, Paris, 1983, pp. 371 et seq. - 95-
in particular with regard to neutra} property, is to be qualified as a wrongful
deniai of the neutrality of the State whose nationals are concerned as owners of
the property, and entails the international responsibility of the belligerent and
thus the duty to make compensation. Such a failure to respect neutrality may
consist in the interference with neutral property, as weil as the disrespect of the
neutral status of the nationals.
4.16 This is confirmed by many arbitral and judicial decisions. In Karmatzucas v.
Germany (1926), the German-Greek Mixed Arbüral Tribunal established Ger
many's responsibility for requisition ofproperty belonging to a neutral national
resident in an occupied territory. 61 In Evghenides v. Germany, the same Tribu
nal held that the requisition of a number of African workers employed by the
claimant, a neutral national, became illegal as it was not followed by an in
demnity: the requisition was therefore considered to constitute an "act commit
ted" which under article 297 of the Peace Treaty ofVersailles 62engaged the re
sponsibility of Germany. 63 The duty to make reparations for the faîlure to re
spect the special status ofneutral States by interfering with the property oftheir
nationals was also confinned in the case Goldenberg et Fils v. Gerniany
(1928) 64 as weil as the Union Bridge Company Case (United States v. Great
Britain). According to the decision in the latter case, Great Britain committed
"a wrongful interference with neutra}property". The Tribunal continued:
"The action constituted an international tort, committed in respect
of neutral property, and falls to be decided not by reference to nice
distinctions between trover, trespass and action on the case, but by
reference to that broad and well-recognized principle of interna-
Recueil des décisions des tribunaux arbitraux mixtes institués par les traités de paix, Vol. VII,
" pp. 17et seq., p. 22.
Official Gazettef the Gennan Reich (Reichsgesetzblatt) 1919, p. 687.
Recueil des décisions des tribunaux arbitraux mixtes instituéspar les traitésde paix, Vol. IX, pp.
692 et sec., p. 694.
CNRIAA, Vol. II, pp. 903 et seq., pp. 909-910. -96-
tionallaw which gives what, in ali circumstances, is fair compensa
tion for the wrong suffered by the neutral owner." 65
4.17 There are numerous further instances which confirm the duty ofbelligerents to
respect neutral property. These include, for example, the German agreement to
compensate the United States for lasses from the Lusitania sinking. 66As late as
the 1970s, Greece was still raising claims against Gennany for the sinking of
Greek merchant ships at a time when Greece was neutral. 67
4.18 Belligerent States are also obliged to respect the neutral status of the nationals
of neutral States. Thus Hague Convention V refers to "neutral persans" and
specifies under which circumstances these persans lose their right to invoke
their neutrality. Articles 16 - 18 provide as follows:
"Neutral Persans
Article 16
The nationals of a State which is not taking part in the war are con
sidered as neutra] s.
Article 17
A neutral cannet avail himself of his neutrality
(a) If he commits hostile acts against a belligerent;
(b) If he commits acts in favor of a belligerent, particularly if he
voluntarily enlists in the ranks of the anned force of one of the par
ties.
In such a case, the neutral shall not be more severely treated by the
belligerent as against whom he has abandoned his neutrality than a
national of the other belligerent State could be for the same act.
UNRlAA, Vol. VI,pp.l38etseq.,p.l41.
UNRIAA, Vol. VII, p. 32.
47 ILR, p. 418. -97-
Article 18
The following acts shall not be considered as committed in favour
of one belligerent in the sense of Article 17, letter (b):
(a) Supplies furnished or loans made to one of the belligerents,
provided that the persan who fumishes the supplies or who makes
the loans lives neither in the territory of the ether party nor in the
territory occupied by him, and that the supplies do not come from
these territories;
(b) Services rendered in matters of police or civil administra
tion."
These provisions reflect the corresponding rule under customary international
law. This aspect of the law ofneutrality was for instance ernphasised in a Note
concertéeof the French Foreign Minister and the French Minister of Trade of
10 September 1861 where it was stated:
"Un beilîgérant ne peut employer, pour nuire à son ennemi, aucun
moyen 68i frappe directement les peuples restés étrangers à la
lutte."
The neutral character of individual persons results from their being nationals of
a neutral State. The factual or legal consequences of the war entail a continuing
duty, even after the cessation of the war, to respect the specifie status which the
neutral State has taken during the war, and to do so as long as any unresolved
question arising from the war is at issue. In the present case, such legal conse
quences are bound up with the reparations regime established as a result of
World War IL Thus, although World War II has long been ended, Gennany
still bas the obligation to respect the neutral status of Liechtenstein as weil as
of its nationals and their property, if and to the extent it applies legal rules
which have their origin in, and are a consequence of, World War IL
A. C. Kiss, Répertoirede la pratique française en matière de droit international public, Editions
du Centre national de la recherche scientifique, Vol. VI, 1969, p. 558, No. 1076. - 98-
D. Germany's violation of the law of neutrality
4.19 Despite its duty to respect the neutrality of Liechtenstein and of its nationals,
Gennany applied the post-war reparations regime to Liechtenstein property in
and after 1995; indeed it does so up to the present.
4.20 According to the regime of reparations established as a consequence ofWorld
War II, Germany was bound to make reparations for lasses suffered arising
from the war. As an aspect of this regime, the Allied Powers were entitled to
use property belonging bath to Germany as a State and to German nationals in
69
arder to provide compensation for war damages. As a corollary, Germany ac
knowledged its obligation, as reflected in Article 5 of Chapter Six of the Set
dement Convention (Annex 16), to make compensation to those German na
tionals whose property was thereby affected. It was thus of cardinal importance
to define and fix on a stable basis the scope of the reparations regime, and to
avoid any subsequent changes in that regime detrimental to neutral States and
their nationals.
4.21 ln view of the objective of these post·war reparations, they could only be taken
against property of Germany as an enemy country and against German nation·
ais,i.e. exclusive!y against property qualified as "enemy property". A condition
for the use of private property for reparation purposes was that this property
was owned by individuals possessing the nationality of a belligerent State, i.e.
Germany. This condition was firmiy established in the instruments forming the
basis of the reparations regime.
See above paras 2.1 et seq. - 99-
4.22 Already at Yalta (Annex 11), this restriction to Germany as enemy country was
made very clear:
"1. Germany must pay in kind for the lasses caused by ber to the
Allied nations in the course of the war."
At Potsdam in 1945 (Annex 12) this restriction to Germany was reiterated.
4.23 Renee, the whole reparations regime could not and did not affect neutra! States
such as Liechtenstein, and their nationals. This was not on!y or even primarily
because such States and their nationals were not bound by those treaties; it bad
a more fundamental rationale associated with the basic principles of the laws of
war and neutrality to which the treaties gave effect. Neutral States and their na
tionals cannat be the abject ofmeasures which subject property to the post-war
reparations regime.
4.24 In its position taken in 1995 and subsequently, Germany bas admitted that the
measures taken under the "Bene§ Decrees" were directed against "enemy prop
70
erty", whether or not they were deemed to be reparation measures. As was
stated by Germany before the European Court ofHuman Rights (Annex 36):
"On the contrary, in their interpretation of Article 3 para. 1 of
Chapter Six of the Settlement Convention ("purpose of reparation
or restitution, or as a resultof the state of war, or on the basis of
agreements concluded, or to be concluded, by the Three Powers
with other Allied countries, neutral countries or former allies of
Germany") the courts have found that, going beyond the classical
notion of reparation, this provision is intended to cover measures
against 'enemy property' more generally." (page 16 of the Memo
rial)
However, the fact that Germany now accepts that the taking of the Liechtenstein property is part
of the reparations regime injustly emiches Germany as will be demonstrated below in Chapter 6,
section B. - 100-
In bath consultation meetings between Liechtenstein and Germany on 10 July
1998 and on 14 July 1999, Germany took the position that this understanding
of "enemy property" applied not only to the particular painting that was the
subject of the dispute before the European Court of Human Rights, but to the
Liechtenstein property in general.
4.25 It is a fact that this new German position relates to property belonging to
Liechtenstein nationals, and that it treats such property as covered by the post
war reparations regime. It is also undisputed at the international leve! that such
property was in no case German, and was not to be treated as enemy property
for the purposes of the post-war reparations regime, in particular by German y.
4.26 It has been shawn above that the law of war does not give a right to belliger
ents to disregard neutral status. The exceptional cases in which such disregard
may be permitted are not applicable to the present case. These exceptions con
cern unneutral services of neutrals or transport of contraband. Neither of these
two situations could apply to the property in question, and the contrary has not
been suggested.
4.27 Following the decision of the Federal Constitutional Court of 28 January 1998
(Annex 32) and in support of this decision, German official statements declared
it reasonable to regard Liechtenstein nationals as German nationals (Annex
36).71 Germany thus treated Liechtenstein nationals who bad been neutra! dur
ing World War II as if they were nationals of one of the belligerent States,
namely Germany. This is to be considered as a dîsregard for Liechtenstein's
neutrality.
4.28 In and after 1995, in disregard of these obligations, Germany denied the Liech
tenstein nationality ofthese persans, regarded them as German nationals for the
Annex 36, p. 14. - 101 -
purposes of the reparations regime, and consequently denied their neutral char
acter. It treats Liechtenstein as if the latter bad been a belligerent during World
War II. Since Gerrnany bad expressly recognîsed that Liechtenstein was neutra!
during World War II, it was under a particular duty to respect the neutral status
of Liechtenstein.
E. The breach of the duty to respect the neutral character
of Liechtenstein and of Liechtenstein nationais
gives rise to a claim of the neutral State
4.29 The breach of the duty of a belligerent State to respect the specifie status of a
neutral State gives rise to a claim of the neutral State. Hague Convention XIII
is unequivocal in this respect when it specifies that "neutral states have an
equal interest in having their rights respected by belligerents". These rights in
elude the treatment of their nationals as neutrals and, consequently, of their
property as neutra! property. Any violation of the neutrality of a State, includ
ing the neutra! character of its nationals, generates a direct claim of the neutra!
State itself. Thus Brownlie includes "wrongful interference with neutra! prop
72
erty" in his calendar of causes of actions giving rise to State responsibility.
Similarly Schwarzenberger states that international responsibilîty is involved if
the action taken by the belligerent against neutra! nationals or property is con
73
trary to the law ofwar. Rousseau writes that the "observation des règlesrela
tives au respect des obligations découlantde la neutralitéest sanctionnéepar la
74
mise en cause éventuellede la responsabilitéinternationale de 1'Etat".
1. Brownlie, System of the Law of Nations. State Responsibility, Clarendon Press, Oxford, 1983,
p. 79. See also ibid, p. 238 (violations of neutralîty as a fonn of direct injury to the State inter
est).
G. Schwarzenberger, Jntemational Law as Applied by International Courts and Tribun.als, VoL
II, The Law of Armed Cont1ict,Stevens, London, 1968, pp. 550 et seq., p. 576.
Ch. Rousseau, Le droit des conflits armés,A. Pedone, Paris. 1983, p. 514. In the same sense P.
Guggenheim, Traité de Droit international public, Vol. II, Georg, Geneva, 1954, p. Sll: "Ce
sont en principe les nonnes sur le délitinternational et les sanctions qu'il déclenchequi sont ap
plicables aux violations de la neutralité, que celles-ci soient le fait des belligérents ou des neu- - 102-
4.30 In the present case Germany breached the right of Liechtenstein as a neutral
State, viz., that its nationals and their property be treated as neutral. Interna
tional law requires that nationals of neutra! states are to be treated as neutral
persans as long as these persans are not acting in an unneutral way, as stipu
lated in Article 17 of Hague Convention V, or are also of the belligerent's na
tionality.
4.31 Since neutrality is a legal status of a State, which becomes manifest, inter alia,
in the treatment of its property and that of its nationals, any deniai or disregard
of the neutra! character of this property necessarily affects the rights of the neu
tra! State.By denying the treatment of this property as a neutra! property, the
belligerent State necessarily denies the neutra! status of the State since neutral
persans acquire their status by virtue of their status as nationals of the neutral
State. Any interference with this status of neutrality entails an injury to the neu
tra! State.
F. Germany's failure to respect Liechtenstein's sovereignty
4.32 The equation of Liechtenstein nationals with German nationals in the context
of the post-war reparations regime furthennore violates Liechtenstein's sover
eignty. Neutrality directly concems the status, in particular the scope and ex
tent of sovereignty, of the neutral State in time of war. 75 The principle of sov
ereign equality of States includes, inter alia, the right of each State freely to
choose and develop its political system/ 6 for instance by deciding to remain
tres". See also P. Daîllier and A. Pellet, Droit international public (Nguyen Quoc Dinh),
L.G.D.J., Paris, 1999, 6thed., p. 940.
K. Hailbronner, "Der Staat und der Einzelne ais Vôlkerrechtssubjekt", in W. Graf Vitzthum,
VO/kerrecht,2nded., Walter de Gruyter, Berlin, 2001, pp. 212-213, where a declaration neutral
ity is considered as an exercisesovereign jurisdiction.
Declaration on Principles of International Law concerning Friendly Relations and Cooperation
among States in accordance with the Charter of the United 1\'ations, GA Res. 2625 (XXV)
(1970). - 103-
neutra!. Neutrality is a manifestation of and therefore inseparably linked with
the sovereign equalîty of States. Accordingly, Principle I of the Final Act of the
Conference on Security and Cooperation in Europe of 1975, which deals with
the sovereign equality of States and respect for the rights inherent in sover
77
eignty, refers to the right of every State to declare itself as neutra!.
4.33 In 1995 and subsequently, the German courts app1ied Article 3 (1) ofChapter
Six of the Settlement Convention (Annex 16) to Liechtenstein nationals al
though the application of this provision is confined to "German external assets
or ether property". The word "German" in Article 3 (1), as will be established
78
in Chapter 5 of this Memorial, refers to the nationality of the owner of the
seized property, irrespective of the ethnicity of the owner of the seized assets or
79
property. In ether words, Article 3 (1) of Chapter Six applies only to the
property of nationals of the Federal Republic of Germany and not to those of
ether States. By applying this provision to Liechtenstein nationals, Germany
extended the scope ratione personae of the treaty provisions, contrary to the
ordinary meaning to be given to the terms of the treaty in their context and in
the light of the treaty's abject and purpose.
4.34 In the present case, the interference with the sovereign rights of Liechtenstein
lies in the fact that by extending the scope of the SeUlement Convention to
Liechtenstein nationals, Gennany ultimately treats them lîke its own nationals,
without any justification for doing so. That this German conduct amounts to a
Conference on Security and Co-Operation in Europe, Final Act, 1 August 1975, 14 ILM 1292,
1294 (1975), Principle I.
See below paras. 5.9 et seq.
K. Doebring, "Vôlkerrechtswidrige Konfiskation eines Gemiildes des Fürsten von Liechtenstein
als "deutsches Eigentum": Ein unrühmlicher Schlusspunkt", 18 Praxis des Internationalen Pri
vat- und Verfahrensrechts 1998, pp. 465 et seq., p. 466; B. Fassbender, "International Decisi
ons", 93 American Journal of International Law 1999, pp. 215 et seq., p. 218; idem, "Klageaus
schlui3bei Enteignungen zu Reparationszwecken- Das Gemâlde des Fürsten von Liechtenstein",
Neue Juristische Wochenschrift 1999, pp. 1445 et seq., p. 1447. - 104-
violation of Liechtenstein's sovereignty rs widely accepted, in particular m
80
German doctrine.
4.35 Germany violated Liechtenstein's sovereignty in three ways. First, it treated
Liechtenstein nationals as German nationals for the purpose of reparations; sec~
ondly, this equal treatment amounts to a defacto invohmtary conferment ofna
tionality wîthout any reasonable relationship of the Liechtenstein nationals to
Germany, let alone an effective or genuine link; and thirdly, this equation is
made solely to the detriment of the Liechtenstein nationals, in that they are de
prived of their property but, contrary to German nationals, do not receive any
benefit, in particular compensation.
1. German y may not treat Liechtenstein nationals
as its own nationals for reparation purposes
4.36 Nationality is the status of a natural person who is attached to a State by a spe
cifie tieof allegiance which forms the basis for persona! rights and duties of the
individual under domestic and international law Y In ether words, the enjoy
ment of these personal rights by the îndividual, such as the right to vote, or the
obligation of the individual to perform specifie persona! duties towards the
I. Seidl-Hohenveldem, "Vôlkerrechtswidrigkeit der Konfiskation eines Gemi:ildesaus der Samm
lung des Fürsten von Liechtenstein als angeblich "deutsches" Eigentum", 16 Praxis des Interna
tionalenPrivat- und Veifahrensrechts 1996, pp. 410 et seq.; idem, "Nachwirkung der Kontroll
ratsgesetzgebung und die deutscheouveriinitât - Zu den Urteilen über die "Bodemeform" und
zur Fortgeltung des Klagestops nach dem (}berleitungsvertrag", rn
V. Gëtzip. Selmer/R. Wolfrum (eds.), Liber Amicorum Günther Jaenicke- Zum 85. Geburtstag,
Springer, Berlin, 1998, pp. 975 et seq., pp. 983, 984; H. Weber, "Amnerkung zur "Liechtenstein
Entscheidung" des Bundesverfassungsgerichts vom 28. Januar 1998", 36 Archiv des VOlker
rechts 1998, pp. 188 et seq., p. 192; K. Doehring, "Vôlkerrechswidrige Konfiskation eines Ge
miildes des Fürsten von liechtenstein ais "deutsches Eigentum": Ein umiihmlicher Schluss
punkt'', 18 Praxis des lntemationalen Privat- und Veifahrensrechts 1998, pp. 465 et seq., p. 466.
Nottebohm case,J.C.J.Reports 1955, p. 23. See also P. Weis, Nationality and Statelessness in
International Law, 1979,p. 29; D.P. O'Cormell, International Law, Vol. 2, 2nded., Stevens,
London, 1970,j. 670 et seq.; Sir R. Jennings and Sir A. Watts, (eds.) Oppenheim's International
Law, Vol. 1, 9 ed., Longman, London, 1992, p. 857, § 379; Ch. Rousseau, Droit international
public, Vol. V, Les rapport conflictuels, Sirey, Paris, 1983,1; I. Seidl-Hohenveldern/T.
Stein, VOlkerrecht, lOthed., Heymanns, Kôln, 2000, p. 234. - 105-
State, such as the duty of military service, presuppose that the individual bas
the nationality of the relevant State. It is general!y recognised that control over
matters of nationality is a concomitant of State sovereignty itself and that these
82
matters fall under the persona} supremacy of the State. Therefore, a State
carmot treat foreigners completely accordîng to discretion particularly in re
spect of those matters which concern the persona} relationship between an in
dividual and his State. For example, a State calling up foreigners for military
service violates the sovereignty of the State of nationality of these individuals,
at least ifthese individuals do not have any connection or link whatsoever with
that State.83
4.37 Likewise, if aState accepts in its legal order that individuals have to contribute,
in certain circumstances, with their private property to meet international repa
ration obligations imposed on that State, such a duty is exclusive!y effective on
the ground of nationality. Since the obligation to provide reparations is an obli
gation of the responsible State, any contribution to this obligation by individu
ais (whether voluntary or, as in the present case, prescribed by the German le
gal order) bas its foundation in the public interest of the State, 84 in that it re
duces the amount of reparations due by the responsible State. 85In other words,
such an obligation of individuals to contribute to the fulfilment of the State's
reparation obligations is a "personal" obligation, similar to that ofmilitary ser
vice, which aState may only exact from its own nationals.
P. Weis, Nationality and Statelessness în International Law, 1979, p. 65; A. Verdross, Vii/ker
recht 5thed., Springer, Wien, 1964,p. 307; Ch. Rousseau, Droit international public, Vol. III,
Les compétences,Sirey, Paris, 1983, p. 134.
I. Seidl-HohenveldemiT. Stein, Vôlkerrecht, lOthed., Heymanns, Kôln, 2000, p. 234; SR. Jen
nings and Sir A. Watts, (eds.) Oppenheim's International Law, Vol. 1, 9thed., Longman, London,
1992, p. 907.
This was recognized by the Gennan Federal Court of Justice, see, e.g., Collection of the Deci
sions of the Federal Court ofJustice in Civil Law Matters (BGHZ), Vol. 13, pp. 83 et seq.
See I. Seidl-Hohenveldern, , Entschadîgungspflîcht der Bundesrepublikfilr reparationsbezoge
nes AuslandsvermOgen. VO!kerrechtlicheBegründung, Verlagsgesellschaft Recht und Wirtschaft,
Heidelberg, 1962, p. 169. - 106-
4.38 Therefore, a State obliged to provide reparations may only resort to the prop
erty of its own nationals in order tomeet its reparation obligations. If it extends
this duty to non-nationals, it will thereby violate the personal authority or su
premacy, and thus the sovereignty, of their State of nationality. By including
the property of Liechtenstein nationals into the reparations regime, Germany
violated the sovereignty of Liechtenstein.
2. The treatment by Germany of Liechtenstein nationals amounts,
pro tanto, to an unlawful involuntary defacto naturalization
4.39 According to the decision of this Court in the Nottebohm case,
"nationality is a legal bond having as îts basis a social fact of at
tachment, a genuine connection of existence, interests and senti
86
ments, together with the existence ofreciprocal rights and duties".
Any conferment of nationality by a State on individuals who are nationals of
other States, who do not have any link to the State conferring its nationality
and who do not consent to such conferrnent infringes the sovereignty of the
87
State of nationality of the individual and is a breach of international law.
Such conduct amounts to a forced confennent of nationality by individuals
which occurs not only if the State formally confers its nationality upon foreign
nationals against their will, but also ifit applies its national law on the basis of
allegiance.
4.40 The effects of the position taken by Germany in and after 1995 are comparable,
pro tanto, to those of a forced imposition of nationality, which is considered as
being in violation of international law, precisely because it is a violation of the
Nottebohm case,l.CJ. Reports1955,p. 23.
ln re Rau, German-Mexican Claims Commission, 14 January 1930, 6 Annual Digest p. 251;
Flegenheimer Claim, Italian-US Conciliation Commission, 20 December 1958,25 ILR, pp. 91et
seq.,p. 112;Compulsory Acquisition of Nationalitycase, Court of Appeal of Cologne, 16 May
1960, 32 JLR,pp. 166 et seq.p. 167. - 107-
persona! supremacy and bence sovereignty of the State of nationality. While it
is clear that the German authorities did not intend to confer de jure nationality
upon the Liechtenstein nationals in question, they nevertheless treated them as
German nationals by applying to them and their property Article 3 (1) and (3)
of Chapter Six of the Settlement Convention, whose application is explicitly
confined to "German nationals". Thus Germany considered and still considers
Liechtenstein nationals as German nationals pro tanta, and does so without
their consent or the consent of Liechtenstein.
4.41 Moreover, the treatment of Liechtenstein nationals as if they were German na
tionals is even Jessjustified in view of the fact that the Liechtenstein nationals
do not have any link to Gennany. As is weil known, the Court held in the Not
tebohm case that the conferment of nationality requires a genuine or effective
88
link:on the part of the individual to the State. Moreover, if aState applies its
nationality Iaws to a large number of nationals of a particular foreign State
without their consenl, such conduct constitutes an encroachment upon the ju
risdiction and personal supremacy of that State and must be regarded as an un
friendly or even hostile'act against the State ofnationality comparable to a vio
lation of the State's territorial jurisdiction.
4.42 In the present case, Germany considers the Reigning Prince of Liechtenstein as
an owner of "German extemal assets or ether property" pursuant to Article 3 of
Chapter Six of the Settlement Convention. Moreover it is clear that ali other
Liechtenstein nationals having assets or other property located in the former
Czechoslovakia and affected by the measures taken under the "BeneS Decrees"
are a1soregarded by Germany as falling under Article 3 (1) and (3) ofChapter
Six of the Settlement Convention. By so doing, Germany has violated the per
sonaljurisdiction and authority of Liechtenstein over its nationals.
Nottebohm case, I.C.J. Reports 1955, p. 23.
Weis,Nationality and Statelessness in International Law, 2""ed., 1979, p. 112. - 108-
4.43 Furthermore Germany treats Liechtenstein nationals as German nationals pro
tanta, only to their detriment. Gennany included Liechtenstein nationals in the
Sertlement Convention only after the duty of Gennany to compensate accord
ing to Article 5 of Chapter Six of the Settlement Convention had been termi
nated. Gerrnany thus deprived Liechtenstein nationals of any right to obtain
compensation for the inclusion of their property in the reparations regime.
Whereas German nationals from the outset feil under the regime established by
Articles 3 and 5 of Chapter Six of the Settlement Convention and thus could
obtain compensation, Liechtenstein nationals were not considered as being sub
ject to that regime as long as compensation was ensured. It was only after Arti
cle 5 of Chapter Six of the Settlement Convention had been terminated and
compensation therefore was no longer available that Germany changed its posi
tion. Thus Liechtenstein nationals were considered as German nationals only
with regard to the negative effects of the reparations regime, and thus only at
their expense and to their detriment, without at the same time granting them
also the benefits of that situation, which were granted to German nationals
properly called. - 109-
CHAPTERS
GERMANY'S OBLIGATIONS OF COMPENSATION FOR PROPERTY
BROUGHT WITH!N THE REPARATIONS REGIME - 110-
A. Germany's interference with Liechtenstein property rights
5.1 By taking its new position in and after 1995, Germany interfered with property
and ether economie rights of Liechtenstein nationals since it declared their
property to be German property which could be used for reparation purposes.
Germany was not entitled to do this, since Chapter Six of the Settlement Con
vention (Annex 16) does not relate to Liechtenstein property, and carmot law
fully be extended to include such property.
1.The Settlement Convention does not relate
to Liechtenstein property
5.2 Chapter Six of the Settlement Convention, which excludes Germanjurisdiction
in respect of a certain category of daims, does not contain any provision which
could lawfully be applied by Germany to Liechtenstein and its nationals. Chap
ter Six only relates to German property. This restriction results from the clear
wording of the Convention itself as weil as from the latter'sobject and purpose.
Indeed the text is unequivocal in respect of its scope of application. Article 3
(1) and (3) of Chapter Six of the Sett1ement Convention (Annex 16) reads as
follows:
"1. The Federal Republic shall in the future raise no objections
against the measures which have been, or will be, carried out with
regard to German extemal assets or ether property, seized for the
purpose of reparation or restitution, or as a result of the state of
war, or on the basis of agreements concluded, or to be concluded,
by the Three Powers with ether Allied countries, neutra} countries
or former alliesof Germany.
3. No claim or action shall be admissible against persans who
shall have acquired or transferred title to property on the basis of
the measures referred to in paragraph L. of this Article, or against
international organizations, foreign governments or persons who
have acted upon instructions of such organizations or govem
ments." - Ill -
Paragraph 3 refers to the measures defined in paragraph 1. Paragraph 1 stipu
Iates two criteria which must attach to the measures in question. First, they
must be measures which have been {or will be) carried out with regard to Ger
man extemal assets or ether property. Second, the objective or basis of the
measures must have been either reparation, restitution, the result of the state of
war or an agreement concluded by the Three Powers (i.e., France, United
Kingdom and United States) with ether Allied countries, neutra} countries or
former allies ofGermany.
5.3 In the present case, the first criterion already excludes Liechtenstein property
from the scope of the Settlement Convention. It is only German property which
is addressed by that provision. By no stretch of imagination can it be estab·
lished that this provision of the Settlement Convention was intended to cover
also third States and nationals of third States. The qualifier "German" used in
Article 3 of Chapter Six of the Settlement Convention applies not only to "ex·
tema! assets" but likewise to "other [German] property". It defines the permis·
sible scope of the post-war reparations regime.
5.4 In order to establish whether Chapter Six of the Sertlement Convention could
relate also tonon·Gennan property, this provision has to be interpreted accord
ing to the applicable rules of international law. Although the Settlement Con
vention dates back to 1954, its interpretation bas to conform to the rules of in
terpretation as embodied in Article 31 of the Vienna Convention on the Law of
Treaties of 1969, which reflect customary international law. In this regard, this
Court in the Kasikili/Sedudu case reaffirmed:
"that customary international law found expression in Article 31 of
the Vienna Convention (see Territorial Dispute (Libyan Arab Ja.
rnahiriya/Chad), Judgrnent, I.CJ Reports 1994, p. 21, paragraph
41; Oil Platforms (Islamic Republic of Iran v. United States of
America), Preliminary Objections, Judgment, I.C.J. Reports 1996
(II), p. 812, paragraph 23). Article 4 ofthe Convention, which pro
vides that it 'applies only to treaties which are concluded by States - 112-
after the entry into force of the... Convention with regard to such
States' does not, therefore, prevent the Court from interpreting the
1890 Treaty in accordance with the rules reflected in Article 31 of
the Convention. " 90
5.5 Article 31 of the Vienna Convention provides as follows:
"General rule of interpretation
1. A treaty shall be interpreted in good faith in accordance with
the ordinary meaning to be given to the terms of the treaty in their
context and in the light of its abject and purpose.
2. The context for the purpose of the interpretation of a treaty
shall comprise, in addition to the text, including îts preamble and
annexes:
(a) any agreement relating to the treaty which was made between
all the parties in connection with the conclusion of the treaty;
(b) any instrument which was made by one or more parties in
connection with the conclusion of the treaty and accepted by the
ether parties as an instrument related to the treaty.
3. There shall be taken into account, together with the context:
(a) any subsequent agreement between the parties regarding the
interpretation of the treaty or the application of its provisions;
(b) any subsequent practice in the application of the treaty which
establishes the agreement of the parties regarding its interpretation;
(c) any relevant rules of international law applicable in the rela
tions between the parties.
4. A special meaning shall be given to a tenn if it is established
that the parties so intended."
5.6 If a special meaning of an expression used in the treaty is invoked, then the
parties to the treaty must have explicitly agreed upon such a special meaning.
Since the Settlement Convention does not stipulate a special meaning in the
sense of Article 31 (4) of the Vienna Convention to the term "German externat
Case concerning Kasikili!Sedudu Island (Botswana/Namibia), l.CJ. Reports 1999, pp. 1045 et
seq.,p. 1059, para. 18 (Judf,'lllentof 13 December). - 113 -
assets or ether property", the ordinary meaning in the sense of Article 31 is de-
ClSlVC.
(a) Interpretation according to the ordinary meaning
5.7 The ordinary meaning of the expression "German extema! assets or ether prop
erty" as used in the Settlement Convention is unequivocal. Where the Settle
ment Convention refers to German property, it means property in the posses
sion of German nationals, either natural or juridical persons. Nationality in this
sense is the nationality granted by national legislation of the State whose na
91
tionality is being referred to.
5.8 Liechtenstein nationals affected by the change of Germany's position never ac
quired German nationality, whether by a formai procedure or by ex lege con
ferment of nationality or in any ether way. Thus according to German national
law, Liechtenstein nationals do not have German nationalîty, and the qualifica
tion of Liechtenstein nationals as German nationals does not correspond to the
ordinary meaning of the ward "German" in the Settlement Convention.
5.9 Contrary to the use of the relevant terms in the Settlement Convention, the
BeneS Decree No. 12 (Annex 6) defined the term "German" exclusively on the
basis of the belonging to a "people". Section 1 (1) (a) of the Decree, that lists
the persans affected by confiscation measures under the Decree states:
" Ch. Rousseau, Droit international public, Vol. III, Les compétences, 1977, p. 134; P. Reuter,
Droit international public, Presses Univ. de Paris, Paris, 1983, p. 274; Sir R. Jennings and Sir A.
Watts, (eds.) Oppenheim's International Law, Vol. 1, 9th ed., Longman, London, 1992, p. 853.
This principleis reflected in Article 3 of the European Convention on Nationality (European
Treaty Series, 6 November 1997, No. 166), which reads:
"1. Each State shall determine under its own law who are its nationals.
2. This law shall be accepted by other States in so far as it is consistent with applicable in
ternational conventions, customary international law and the principlesaw generally
recognised with regardo nationality." - 114-
"a) vsech osob nJmecké a mad'arskénârodnosti, bez ohledu na
statni prislusnost,"
Translation:
"a) Ali persans belonging to the German and Hungarian people re
gardless oftheir nationality,"
This Decree does not aim at conferring or attributing natîonality in the sense of
the law on nationality when it speaks about belonging to the German or Hun
garian "people". It clearly distinguishes between "ncirodnost" in the sense of
belonging to a "people" and "sttitni pfisluSnost" in the sense of the legal status
ofnationality. This distinction is also illustrated by Constitutional Decree No.
33 of 2 August 1945 on the regulation of the Czechoslovak nationality of per
sans belonging to the German or Hungarian "people" (Annex 46) since Section
1 (1) of the Decree refers to
"(1) éeskoslovenSti stcitni obCané ncirodnosti nemecké nebo
mad'arské, ktefi podle pfedpisU jeizi okupaéni moci nabyli stcitni
pfisluSnosti némeckénebo mad'arské,pozbyli dnem nabyti takové
stdtni pfisluSsnosti Ceskoslovenskéhostatniho obéanstvi.
Translation:
"(1) Czechoslovak natîonals belongîng to the German or Hungar:ian
people who acquired German or Hungarian nationality under the
regulations of the foreign occupational power lost their Czechoslo
vak nationality as of the day ofsuch acquisition."
Where the "BeneS Decrees" refer to persans belonging to the German (or Hun
garian) "people", this qualification is unconnected with, and independent of,
the nationality of these persons in the legal sense, including in the sense of the
Settlement Convention.
5.10 Gennany cannot rely on the "BeneS Decrees" for the purpose of interpreting or
applying the Settlement Convention. The term "belonging tc a people" used by
the "BeneS Decrees" cannet be interpreted as relating to nationality in its ordi
nary meaning under international law as a legal status of individuals. Liechten- - 115 -
stein nationals did not become German nationals by these Decrees, whether for
the purposes of the Czechoslovak nor of the German legal arder, including the
Settlement Convention.
(b) Interpretation according to the context, object and purpose
of the Settlement Convention
5.11 This interpretation of the term "German" used in the Settlement Convention is
corroborated by the abject and pmpose of the relevant provisions of the Con
vention. The objective of these provisions is to ensure that no German court
can exercise jurisdiction over a dispute conceming reparation measures for
damages caused by Germany in World War IL According to the regime of
reparations established as a consequence of the War, Germany as an enemy
State was bound to rnake reparations. In the Peace Treaties after World War II
reparations were exacted from the enemy countries because of "losses caused
to [specifie Allied and Associated States] by milîtary operations and by the oc
cupation by [the relevant enemy country] of the territory ofthose States". Simi
larly, in the Protocol of the Yalta Conference (Annex 11) the object of the
reparations to be made by Germany was to make good "the losses caused by
ber to the Allied Nations in the course of the war". Under this title the Allied
Powers were entitled to use property belongîng to Germany as a State and
German nationals to cover damages caused in World War II.
5.12 In view of the objective of such reparations, they could be taken only against
property of German y as an enemy State and German nationals as nationals of
such a State, and under no circumstances against neutral States and their na
tionals. This condition was firmly established in the conventional and custom
ary rules of international law on which the post-war reparations regime was
based. - 116-
5.13 Hence, the whole post-war reparations regime cannet and does not affect neu
tral States such as Liechtenstein, or the nationals of such States. In this context,
the application of Chapter Six of the Settlement Convention necessarily re
quires that the persan affected by reparation measures be a German national.
Even the property of persans who obtained German nationality only after the
annexation or incorporation of the State whose nationals they were, such as, for
example, persans who had Czechoslovakian nationality prier to the occupation
of the latter but who acquired German nationality during the occupation period,
92
could not be used for reparation purposes. Neither Liechtenstein nor Liech
tenstein citizens caused lasses during World War II in the sense of the post-war
reparations regime. Thus there was no basis whatever for treatîng them as cov
ered by the regime.
5.14 A further indication on the correct interpretation of German property for the
purposes of the post-war reparations regime is provided by Law No. 5 of the
Control Council on "Vesting and Marshalling of German Externat Assets" of
30 October 1945 (Annex 14). Its preamble refers tc the control of the Control
Council of ail "German assets abroad" and to the intention to "divest the said
assets of their German ownership". Article III (2) defines "any persan of Ger
man Nationality outside Germany" as follows:
"For the purpose of this Article the term "any persan of German
Nationality outside Germany" shall apply to a person who has en
joyed full rights of German citizenship under Reich Law at any
time since 1 September 1939 and who has at any time since 1 Sep
tember 1939 been within any territory then under the control of the
Reich Govemment but shall not apply to any citizen of any country
annexed or claimed to have been annexed by Germany since 31
December 1937."
See I. Seidl-Hohenveldem, , Entschlidigungspflicht der Bundesrepublik for reparationsbezoge
nes AuslandsvermOgen.VOlkerrechtliche Begründung, Verlagsgesellschaft Recht und Wirtschaft,
Heidelberg, 1962,p. 127; this consequence was corroborated in a decision of the Austrian Su
preme Court of2 June 1958, SZ XXXI (1958), No. 83. - 117 -
Although this definition is confined to the application of Article III, ît
nevertheless fumishes a certain understanding of the term "German" which is
based on nationality stricto sensu. There is no indication that, in other legal
instruments of that time and relating to matters of this kînd, any different
understanding was meant.
5.15 This interpretation is confirmed by Law No. 63 of the Council of the Allied
High Commission on "Clarifying the Status of German Externat Assets and of
their Property taken by Way of Reparation or Restitution" (Annex 15) which
partially replaced Law No. 5. It addresses in its Article 1 (1) (a):
"any property which, on or prior to the effective date of this Law,
was located in any foreign country and German-owned and which,
after September 1, 1939, has been or will be transferred or liqui
dated under the law of such country, or under the law of any other
country by agreement with the former country
(i) pursuant to measures taken in connection with the war
against German y by the government of any country which has ad
hered to the United Nations Declaration of January 1, 1942, or
(ii) pursuant to any agreement, accord or treaty regarding the
disposition of German extemal assets which has been or will be
concluded with the participation of France, the United Kingdom
and the United States of America, or
(iii) pursuant to measures taken in satisfaction of claims against
Germany, or
(iv) pursuant to reparation measures in Japan or Tangier;"
In view of the context, German property in the sense of this law can only be
understood as property of German nationals. The measures taken under the
"BeneS Decrees" against Liechtenstein cannat fall within the purview of this
provision since these assets cannat be considered as "German-owned" or as
"German extemal assets". - 118 -
5.16 This definition of German assets was confirmed by Article 6 A of the Paris
Agreement on Reparation from Germany of 14 January 1946 (Annex 13)
which provided that each Signatory Government should ...
"...hold or dispose of German enemy assets within itsjurisdîction in
manners designed to preclude their return to German ownership or
control and shall charge agaînst its reparation share such assets..."
This provision leaves no doubts that only those assets were referred to which
belonged to Germans being enemies to the Allied and Associated Powers. The
neutral status of Liechtenstein excludes the application of the expression
"German enemy assets" to Liechtenstein property. The notion of ''German
ownership or control" must be constructed as referring only to property of
German nationals.
5.17 According to the ordinary meaning, the object and purpose of the Settlement
Convention (Annex 16), its context as well as ether applicable rules of interna
tional law, Chapter Six of the Settlement Convention only concemed Germany
and German nationals, and neither related to nationals of third States, nor
obliged third States to tolerate such an extension of the scope of the measures
addressed by it.
5.18 According to the standards fonnulated by this Court in the Fisheries Jurisdic
tion case with regard to the position of the United K.ingdom, Germany "cannet
be held ignorant" of such an interpretation so that it cannet daim the inoppos
93
abilityof this interpretation. Sorne of the instruments defining the meaning of
the term "German" were concluded by Germany, ethers were promulgated in
the Official Gazette of the Allied High Commission or the Control Council in
Gennany and bad therefore the force of law (e.g. Allied High Commission Law
No. 63 (Annex 15) and Control Council Law No. 5 (Annex 14)).
Fisheries Case (United Kingdom v Norway)Judgrnent of 18 December 1951, l.C.J Reports
1951,p.139. - 119-
2. Interference with property rights
5.19 Having regard to the absence of any right to interfere with Liechtenstein prop
erty under Chapter Six of the Settlement Convention (Annex 16), Germany in
fringed the property 1ights of Liechtenstein and Liechtenstein nationals by in
cluding the Liechtenstein property into the post-war reparations regime and re
fusing compensation for it.This infringement consisted, in particular, in the
deniai by Germany ofrights to Liechtenstein property which was subject to the
measures under the "BeneS Decrees".
5.20 Prior to the judgments of the German courts and the subsequent German decla
rations, Liechtenstein nationals enjoyed rights under German jurisdiction con
ceming their property which was subject to the "BeneS Decrees". Neither had
Germany included this property into the German extemal assets which were
subject to their reparations regime, nor bad it regarded their reparations issue as
a settled matter which would have entailed the final Joss of any rights to such
assets. Liechtenstein nationals could, under German jurisdiction, dispose of
property they possessed in foreign countries since, in terms of the German le
gal arder, they bad not lost their title to such property, and they could enforce
these transactions by resort to the German judicial system, since they could in
stitute legal proceedings to protect transactions relating to their property. These
rights are to be seen as related to the right of enjoyment of their property,
which is protected by general international law. According to the German posi
tion taken before 1995, it was well established that, for Germany, the persans
whose property was subject to measures under the "BeneS Decrees" did not
lose their title to that property. Liechtenstein nationals who were in a similar
situation still possessed their title to the property under and according to Ger
man jurisdiction. - 120-
5.21 In this regard, it is important to note that Germany had until the 1990s consis
tently taken the position that the post-war seizure of German extemal assets
was unlawful, and that the question of the transfer of the rights to the property,
including the question of the title, was an open question. In particular, it bad
consistent! y held that the question of expulsion and expropriation of individu
ais from Czechoslovakia under the "BeneS Decrees" was an unsettled question.
This position was still reflected in a letter of the German Federal Chancellor
Dr. Helmut Kohl of 14 January 1997 to the Reigning Prince of Liechtenstein,
(Annex 40), contrary to the first German court decisions in the Pieter-van-Laer
case. German y did not state that Liechtenstein nationals had lost their rights re
lating to property subject to the "BeneS Decrees".
5.22 In its position taken in 1995 and subsequently, Germany, however, declared
that the measures taken under the "BeneS Decree" against Liechtenstein prop
erty were reparation measures in the sense of the Settlement Convention. This
position was exacerbated by the fact that Germany declared the issue of repara
tions as finally settled. This position entailed a finalloss of the title to property
being subject to reparation measures so far as Germany is concemed. By virtue
of the application of the reparations regime to Liechtenstein property, Gennany
recognised the passing of title from the Liechtenstein owners to Czechoslova
kia (and then the Czech Republic), so that Liechtenstein and its nationals lost
any legal possibîlity to regain their property or to enter into legal transactions
regarding this property under German jurisdiction and, even, with respect to
other countries. Only the application of the reparations regime completed the
loss of the rights to property of the former owners 94 once Germany regarded
the reparations matter as finally settled. The effect of the Joss of title has been
explicitly provided for in the laws enacted by the Control Council. Thus Law
See I. Seidl-Hohenveldern, Entschiidigungspflicht der Bundesrepublikfür reparationsbezogenes
Auslandsvennügen. Vülkerrechtliche Begründung, Verlagsgesellschaft Recht und Wirtschaft,
Heidelberg, 1962,. 175. - 121 -
No. 5 of the Control Council on "Vesting and Marshalling of German External
Assets" of30 October 1945 (Annex 14) provided in Article III:
"Ali rights, titles and interests in respect of any property outside
Germany which is owned or contro1led by any persan of German
nationality outside Germany or by any branch of any business or
corporation or ether legal entity organised under the law of Ger
many or having its princip le place in German y are hereby vested in
the Commission."
5.23 The laws enacted by the Control Council bad legal force in Germany, so that
all rights to property which feil within the scope of this law, including title to
that property, passed ex lege to the Commission.
5.24 Article 2 of Law No. 63 of the Allied High Commission (Annex 15) confirmed
this effect with regard to property defined in Article 1 (1):
"1. Ali rights. title or înterests of former owners to or in property
to which this Law extends shall be deemed to be extinguished -
(a) in the case ofproperty within the purview of Article 1, para
graph 1 (a), of the date oftransfer or liquidation;
(b) in the case of property transferred or delivered by way of res
titution within the purview of Article 1, paragraph 1 (b), at the date
ofrelease to the claimant country;
(c) in the case of property transferred or delivered by way of
reparation within the purview of Article 1, paragraph 1 (b), at the
date of the actual delivery of such property, or where there has
been no actual delîvery, at the date shawn in the inventory deter
mining the valuation for the purpose of reparation."
Law No. 63 was confirmed by the second sentence of Article 2 of Chapter Six
of the Settlement Convention (Annex 16):
"The Federal Republic will not repeal or amend Law No. 63 except
with the consent of the Three Powers. However, paragraph 1 of Ar
ticle 6of Law No. 63 shall be deemed to be repealed and paragraph
2 to be amended to provide that the powers therein conferred upon
the Allied High Commission may be exercised by the Federal Gov
ermnent." - 122-
Although this legal effect was confined to property which was not situated
within the jurisdiction of the Allied and Associated Powers (Article IX of Law
No. 63), it reflects that the loss of title is a necessary legal consequence of
reparation measures. However, as far as measures such as the "BeneS Decrees"
were concemed, since these were not at that time considered or held to be repa
ration measures, Gennany, according to its former position, did not attach to
them the same legal effect. In particular it did not consider them as entailing
any loss of rights, including title, to the property in question, since it consid
ered those measures as unlawful.
5.25 The position taken by Germany in and after 1995- applied to ali Liechtenstein
property seized by the measures based on the "BeneS Decrees" - has the effect
of invalidating the title of Liechtenstein nationals to their property being sub
ject to the "BeneS Decrees", so far as Germany is concerned. Liechtenstein na
tionals no longer obtain legal protection for any legal transaction regarding this
property under German jurisdiction. The invalidation of this title and of ali
other rights to the Liechtenstein property amounted to an internationally
wrongful infringement of Liechtenstein property rights.
5.26 This position would have effect not only with regard to German jurisdiction,
but also with regard to the other States Parties to the Settlement Convention,
and even to third States. In general, a treaty creates rights and duties only as
between States parties..It is, however, not excluded, but- on the contrary- even
very likely that courts ofthird States acknowledge the loss of a right which was
relinquished by a treaty concluded by the State of nationality of the plaintiff. 95
That the interpretation of the Settlement Convention by Germany has indeed
effect for other jurisdictions than Germany is corroborated by the decision of a
Japanese Court in Roland Sonderhoffv. Minister of Finance:
Ibid, p. 74. - 123-
"Since the Convention [i.e. Settlement Convention] is interpreted to
mean that with regard to the disposition of the seized German ex
tema! assets by the United States, the United Kingdom and France,
neither the German Govemment nor an individual German national
who had title to such German externat assets is allowed to contest
by litigation the validity of the disposition and the measures taken
in c01mection with such disposition... Bence, Japan, according to
the purpose of the Convention, may not disturb in a litigation
against German nationals the disposition of German property in Ja
pan made by the United States of America, the United Kingdom
and France and the measures taken by the Japanese Govemment
1196
following such disposition.
Since the effect of the German position relating to the interpretation of the Set
tlement Convention reaches even beyond the parties to the Settlement Conven
tion as demonstrated by the case Roland Sonderhoff v. Minister of Finance, the
position taken by Germany in 1995 and subsequently considerably reduces the
possibility of Liechtenstein nationals making use of the rights relating to their
property also within ether jurisdictions. For these other jurisdictions such anin
terpretation would be the only legally correct one. If in a case before any na
tional court the judges are bound to examine the applicability of the Settlement
Convention, they would have to conform to such an interpretation. If other
States follow the position taken by Germany in 1995 and subsequently, the loss
suffered by the Liechtenstein nationals would be aggravated further. In this re
spect, it has to be noted that the Czech Republic replied to Liechtenstein during
the OSCE Economie Forum on 26 May 1999:
"The concrete property claims of the Liechtenstein family were
dealt with in the past by Czech and German courts, the proceedings
of which, however, resulted in verdicts rejecting the daims raised
by the Liechtenstein party." (Attachment to Armex 44)
%
3 Japanese Annual of International Law 1959. - 124-
This reply reveals that the Czech Republic identified itself with the new Ger
man position. This German position precludes the invocation of the illegal na
ture of the taking of Liechtenstein property under the "BeneS Decrees".
5.27 This conduct attributable to Germany and resulting from its position taken in
1995 and subsequent! y breaches the duty to respect the rights of foreigners. In
particular, in the present case Germany has interfered with the rights of Liech
tenstein nationals to their property.
5.28 Every State is bound by international law to respect the rights of foreigners. In
this regard, Germany in its Memorial in the LaGrand case relîed on § 711 of
the Restatement of the Foreign Relations Law of the United States as a reflec
tion of existing customary international law. This paragraph provides:
"A state is responsible under international law for injury to a na
tional of another state caused by an official act or omission that
violates
(b) a persona! right that, under international law, astate is obli
97
gated to respect of individuals of foreign nationality; ..."
5.29 The right to enjoy property as protected by customary international law has to
be given a bread understanding. This understanding is well established in the
literature and by numero us international decisions. Katzarov states that:
"the content given to property by the law from remotest times dawn
to the codes of the nineteenth and early twentieth centuries which
are still in force, has a positive and a negative aspect :
(a) it is a right of disposai which is beth absolute and aise unlim
ited in point oftime; this is the positive aspect;
(b) it is exclusive, which means that it confers upon its bolder the
power to forbid any ether person to perforrn an act of disposai; this
is the negative aspect." 98
American Law Institute, Restatement of the Law (Third). The Foreign Relations Law of the
United States, ALI Publishers, 1987, Vol. 2, p.§1711.
K. Katzarov, The Theory of Nationalisation, Nijhoff, The Hague, 1964, p. 103. - 125-
This bread mearung is confinned also, for example, by Higgins 99 or by
Mann. loo
5.30 More generally, international tribunals have confirmed the bread meaning of
the term expropriation and recognised that taking of contract rights, like taking
of tangible property, or of any right which can be the abject of a commercial
transaction, îs compensable. In the Elettronica Sicula S.p.A. (ELSI) (United
States of America v. ltaly) case, a Chamber of this Court referred to the "use,
enjoyment and disposai" of property which was protected by international
101
law. Numerous ether judgments and awards on international tribunals cor
roborated this broad meaning, such as the Iran-United States Claims Tribunal
in Amoco International Finance Corporation v. Government of the Jslamic Re
102
public of Iran, Tippetts, Abbets, McCarthy, Stratton v. TAA1S-AFFA Consult
ing Engineers of Iran 103and Phillips Petroleum Co Iran v. The Islamic Repub
lic of Iran et al.,04or an ICSID Tribunal in Southern Pacifie Properties (Mid
dle East) Limited v. Arab Republic of Egypt. 105
5.31 Declarations by international authorities and broad judicial practice clearly es
tablish the rule of customary international law which Germany has breached by
virtue of its position taken in and after 1995 and subsequently, as it interfered
in the rights of Liechtenstein nationals to property which had become subject to
the "BeneS Decrees". The qualification of such property as beîng subject of
R. Higgins, "The Taking of Property by the State", 176 Recueil des Cours 1982 III, pp. et seq.
259, p. 271.
F.A. Mann, "Outlines of a History of Expropriation", 75 Law Quarterly Review 1988, pp. 188 et
seq.,p. 190.
Case Concerning Elettronica Sicula S.p.A. (ELSI), I.CJ. Reports 1989, p. 15.
'"'
'"' Partial Award No. 310-56-3, 14July 1987, 15 Iran-US.C.T.R. 189, p. 220.
wo Award No. 141-7-2,29 June 1984,6 Iran-U.S. C.T.R. 219, p. 225
'"' Partial Award No. 425-39-2,29 June 1989,21 Iran-US C.T.R., p. 79
'"' 32ILM 968 (!993). - 126-
reparation measures, ensuring the invalidation of the title to such property and
denying any other right to such property including the right of legal protection,
amounted to an infringement of property rights of Liechtenstein nationals
which entails the duty of compensation.
B. Failure to compensate Liechtenstein notwithstanding
its inclusion within the reparations regime
1.The regime of Articles 3 and 5 of Chapter Six
of the Settlernent Convention
5.32 Gennany is bound to compensate the Liechtenstein nationals because it in
cluded their property within the reparations regime tmder Chapter Six of the
Settlement Convention (Annex 16) without any compensation to the owners of
the property. In this respect, Germany also breached international law since,
even supposing that Germany were considered to be entitled to use Liechten
stein property for the purpose of reparation, it is under a duty to compensate for
the loss suffered by the former owners. According to Article 5 of Chapter Six
of the SeUlement Convention, the Federal Republic must ensure that the former
owners of property seized pursuant to the measures referred to in Articles 2 and
3 ofthat Chapter are compensated. Article 3 (1) refers to...
"measures which have been, or will be, carried out with regard to
German external assets or ether property, seized for the purpose of
reparation ...".
Article 3 (3) provides that
"no claim or action shall be admissible against persans who shall
have acquired or transferred title to property on the basis of the
measures referred to in paragraph 1..." - 127-
5.33 Gennany is thus bound to ensure compensation to all individuals suffering
from measures referred to in Article 3 of Chapter Six of the Settlement Con
vention. Beneficiaries of Article 5 of Chapter Six of the Settlement Convention
are expressis verbis "the former owners of property" seized for the purpose of
reparations.
5.34 If the property of Liechtenstein nationals was seized for reparation purposes,
these persans would have to be classified as "former owners" of these proper
ties. The Principality of Liechtenstein relies on Germany's classification of
Liechtenstein property seized by Czechoslovakia. Referring to these assets the
Federal Government, in its reply to the application of Prince Hans-Adam II be
fore the European Court of Human Rights (Annex 36), confirmed that the two
requirements of Artic-le3 (1) of Chapter Six of the Settlement Convention (i.e.
"German external assets" and "seized for the purpose of reparation") are ful
filled.106Thus, Germany qualified Liechtenstein property as German foreign
assets that had been seized for reparation purposes.
2. Duty of Germany to compensate victims of reparation measures
5.35 In and after 1995 Germany declared the post-war reparations regime applicable
to Liechtenstein property. This position necessarily entails that, although the
measures of expropriation were not taken by Germany itself, Germany never
theless accepted that Czechoslovakia, as a member of the Allied and Associ
ated countries, was entitled to take post-war reparations against Liechtenstein
property because ofits classification as German property.
5.36 The obligation to make reparations for World War II was imposed on Germany
as a defeated State. In this sense, Article 2 A of the Paris Agreement (Annex
Memorial of the Agent ofGermany of29 October 1999, p. 14 (Annex 36). - 128 -
13) clearly spells out that the reparations after World War II were directed
against the State itself:
"The Sîgnatory Governments agree among themselves that their re
spective shares of reparation, as determined by the present Agree
ment, shall be regarded by each of them as covering ali its claims
and those of its nationals against the former German Govemment
and its Agencies, of a governrnental or private nature, arising out of
the war (which are not otherwise provided for), including costs of
German occupation, credits acquired during occupation on clearing
accounts and daims against the Reichskreditknssen."
The same princip le, according to which the subject obligated by the reparations
regime was the State itself, was already embodied in Part VIII of the Treaty of
107 108
Versailles and Part VIII of the Treaty of St. Germain after the First World
War.
5.37 This established system entails the general duty of the defeated State to com
pensate the individual owners for losses suffered by them as a consequence of
the use of their property for reparation purposes. As a preliminary to the nego
tiations to the Peace Treaties after World War I, the ultimatum of the Allied
Powers referred to Germany as being obliged to compensate its nationals. 109
The Peace Treaty of Versailles provîded such a duty in Article 297 (i):
"SECTION IV.
PROPERTY, RIGHTS AND INTERESTS.
ART!CLE 297.
The question of private property, rights and interests in an enemy
country shall be settled according to the princip les laid down in this
Section and to the provisions of the Annex hereto.
!Oï Official Gazette of the German Reich (Reichsgesetzblatt) 1919, p. 687.
'" Official Legal Gazette Austria (Staatsgesetzblatt) 1920, No. 303.
See I. Seidl-Hohenveldern, Entschiidigungspjlicht der Bundesrepublîkfor reparationsbezogenes
'"' Auslandsverm6gen. Volkerrechtliche Begründung, VerlagsgesellschaftRecht und Wirtschaft,
100.
Heidelberg, 1962, p. - 129-
(i) Germany undertakes to compensate her nationals in respect
of the sale or retention oftheir property, rights or interests in Allied
or Associated States."
The Treaty of Saint-Germain contained a similar provision in its Article 249.
5.38 After World War II, a duty to pay reparations was imposed on the enemy coun
tries by the various Peace Treaties. Again, this duty was imposed directly on
the enemy States, and the Peace Treatîes did not stipulate the right to use pri
vate property for reparation purposes. Such provisions, each under the heading
"Reparation and Restitution", were contained in the Peace Treaties with Bul
110 111 112
garia (Article 21), Finland (Article 23), Hungary (Article 23), and Re
113
mania (Article 22) . The Peace Treaty with Italy contained a Section
"Reparation" by which similar duties were imposed on Italy (Article 74 et
seq.). The Peace Treaty with Japan also confirmed the duty to pay
114
reparations. Since these duties were imposed directly on the enemy States
and did not therefore involve property owned by individuals, these treaties did
not contain a duty of compensation towards individuals in this context.
5.39 These provisions clearly establish that the objective of the reparations regimes
was to impose an economie burden on the defeated States themselves and not
on their nationals as individuals. The duty to make reparations could only be
imposed on the States themselves, as the acts which entailed the duty of repara
tions were attributable specifically to each of those States. For its part, Ger
many identified itself with this view in 1952 when it declared that measures
no United Nations Treaty Series, No. 643.
"' United Nations Treaty Series, No. 746.
United Nations Treaty Series, No. 644.
United Nations Treaty Series, No. 645.
"'
'" United Nations Treaty Series, No. 1832. -130-
against individuals under the title of reparations were contrary to international
1aw_lls
5.40 Whenever these treaties contain clauses according to which private property
may be used in order to meet obligations imposed on the States such as repara
tion duties, they regularly connect it with a duty of the State in question to
compensate the individuals for the relevant lasses. In this regard, the Peace
Treaty with Italy provided in Article 74 D that claims of Allied and Associated
Powers other than those mentioned in Article 74 A-C (i.e. USSR, Albania,
Ethiopia, Greece and Yugoslavia) ...
"shall be satisfied out of the Italian assets subject to their respective
jurisdictions under Article 79 of the present Treaty." 116
In this case, Article 74 E recognized the duty to compensate the individuals
who suffered lasses:
"The Italian Govenunent undertakes to compensate ali natural or
juridical persons whose property is taken for reparation purposes
under this Article."
5.41 These Peace Treaties consistently contain a section on "Economie Clauses"
which, inter alia,entîtles the Allied and Associated Powers to confiscate prop
erty owned by nationals of the relevant enemy country. In these treaties, the
relevant enemy country is routinely obliged to compensate the nationals whose
property was taken. For example, Article 25 of the Peace Treaty with Bulgaria
117
reads:
'" Written report of the Committee of the Federal Parliament for the Occupation Statute and Other
Externat Affairs of 16 May 1952 (Annex 20), p. 6; Explanatory Memorandum to the Settlement
Convention of21 July 1952 (Annex 22), p. 55.
,,. United Nations TreatySeries, No. 747.
United Nations Treaty Series, No. 643. - 131 -
"Article 25
1. Each of the Allied and Associated Powers shall have the right
to seize, retain, liquidate or take any other action with respect to ali
property, rights and interests which at the coming into force of the
present Treaty are within its territory and belong to Bulgaria or to
Bulgarian nationals, and to apply such property or the proceeds
thereof to such purposes as it may desire, within the limits of its
claims and those of its nationals against Bulgaria or Bulgarian na
tionals, including debts, ether than claims fully satisfied under
ether Articles of the present Treaty. All Bulgarian property, or the
proceeds thereof, in excess of the amount of such claims, shall be
returned.
3. The Bulgarian Government undertakes to compensate Bul
garian nationals whose property is taken under this Article and not
retumed to them."
Equivalent provisions were contained under the heading "Economie Clauses"
in the Peace Treaties with Hungary (Article 29), 118 Italy (Article 79) 119 and
120
Remania (Article 27) .In ali these cases, the same structure with regard to
the duty to compensate individuals for the losses they bad suffered from con
fiscations either under the title of reparation or of ether claims against the rele
vant enemy State, which were made by the Allied and Associated Powers after
World War II, was applied as to Germany. Irrespective of the question of the
legal basis for the taking ofproperty, the State Treaty for the Re-Establishment
of an Independent and Democratie Austria of 15 May 1955 provided a similar
duty of compensation in its Article 27 (2): 121
"" United Nations Treaty Series, No. 747.
"' United Nations Treaty Series, No. 747.
United Nations Treaty Series, No. 645.
'"
'" United Nations Treaty Series, No. 2949. - 132-
"Article 27
Austrian property in the territory of the Allied and Associated
Powers
2. Notwithstanding the foregoing provisions, the Federal Peo
ple's Republic of Yugoslavia shall have the right to seize, retain or
liquidate Austrian property, rights and interests within Yugoslav
territory on the coming into force of the present Treaty. The Gov
ernment of Austria undertakes to compensate Austrian nationals
whose property is taken under this paragraph."
5.42 The fact that all these Peace Treatîes provide for this duty of compensation re
flects the existence of such a duty even in the absence of corresponding treaty
provisions, i.e., a duty under customary international law
5.43 While itis true that this kind ofpost-war reparations regime has been imposed
on the defeated States on!y sînce World War I, mainly on a treaty basis, this re
iteration of the same conventional rule in subsequent conventional texts "con
siderably facilitates identification, since it leads to the accumulation, and con
centration, of consistent State practice upon these rules over a longer period of
122
time". This conclusion is genera11yrecognised in the doctrine as weiL
5.44 A series or recurrence of treaties laying down a similar rule may not only pro
123
duce a new principle of customary law, but may already establish the exis
tence of the corresponding customary rule. What is essential is that the rule be
capable of general application, irrespective ofwhether it is contained in a mul
tilateralor bilateral treaty, the rule may not be subject to reservations, the trea-
M. E. Villiger, Customary International Law and Treati2Dded., Kluwer, The Hague, 1997, p.
236.
Starke, "Treaties as a "Source" of International Law", 23 British Yearbookfor International Law
1946, pp. 344 et seq. - 133-
ties must be widespread and representative, and the parties to them must in par
ticular include the States whose interests are specifically affected. 124
5.45 As regards the rule to the effect that aState obliged to provide war reparations
is under the obligation to compensate those individuals who are affected by the
measures taken for reparation pm'Poses, ali the criteria necessary for the exis
tence of a customary rule of international law are met. This rule is part of a
general regime whose purpose is to regulate and control the process of repara
tions and which, therefore, does not allow for reservations. This rule further
more bas met with widespread and representative recognition by State Parties
belonging to the Western as well as the Eastern European Group, the North and
125
Latin American as well as the Asian and the African Group. More impor
tantly, the participation in the practice of the compensation rule includes the
States whose interests are specifically affected. This widespread and represen
tative practice reveals that at the tirne of the conclusion of the peace treaties
there existed a general conviction that this duty of compensation was a neces
sary corollary of the post-war reparations system in cases where the reparations
were covered by property owned by private indivîduals.
North Sea Continental Shelfcase, l.CJ Reports, !969, p. 42, para. 7R. Baxter, Treaties and
'" Custom, 129 Recueil des Cours, 1970-I, pp. 62 et seq. See also: Statement ofPrinciples Applica
ble to the Fonnationof General Customary International Law, adopted by the International Law
Association on its 69thConference in 2000, Report of the Sixty-i'·1ïnthConference, London,
2000, Principle 26, p760.
For instance, the foliowing States, representing ali continents, are parties to the Peace Treaty
with Italy(United Nations Treaty Series, No. 747): Albania, Australia, Belgium, Brazil, Byelo
russia, Canada, Taiwan, Czechoslovakia, Ethiopia, France, Greece, India, Italexico, Nether
lands, New Zealand, Pakistan, Poland, South Africa, The United K.ingdom,the United States of
America, Ukraine and Yugoslavia. Likewise, the signatories to the Peace Treaty wîth Japan
(United Nations Treaty Series No. 1832) are representative: Argentîna, Australia, Belgium, Ba
livia, Brazil, Cambodia, Canada, Ceylon, Chile, Colombia, Costa Rica, Cuba, the Dominîcan
Republic, Ecuador, Egypt, El Salvador, Ethiopia, France, Greece, Guatemala, Haiti, Honduras,
Indonesia, Iran, Iraq, Laos, Lebanon, Liberia, Luxembourg, Mexico, the Netherlands, New Zea
land, Nicaragua, Norway, Pakistan, Panama, Paraguay, Peru, the Philippines, Saudi Arabia,
Syria, Turkey,South Afuca, the United Kingdom, the United States, Uruguay, Venezuela, Viet
nam and Japan. - 134-
5.46 The duty to pay compensation as expressed in the Peace Treaties reflects the
general duty of the State which is subject to reparation measures to compensate
its own nationals as the former owners who have suffered lasses from such
measures. As these nationals are not obliged to make reparations, but only the
State itself, their lasses are economie sacrifices to the benefit of their State
which, in turn, requires the State to compensate the individuals. Any ether so
lution would give the State the possibility to extemalise its duty of reparations
to individuals without suffering any economie lasses or, at least, any lasses
commensurate with the required reparations. Under this latter assumption, the
purpose of the post-war reparations regime would have failed. It is however a
general princip le of interpretation that legal rules, including those of customary
law, must be interpreted so asto achieve theîr objective. This would also con
flict with basic princip les of general international law, such as the protection of
private property rights or the prohibition of unjust enrichment. Furthermore,
the incidence of reparations in such a case would be arbitrary, since it would
fall only on those nationals who possessed extemal property.
5.47 If Germany was not under a duty to compensate the former owners of the as
sets which became subject of reparation measures, it would have been in a bet
ter position than the ether enemy States. With regard to these States, the Peace
Treaties impose direct!y on them a duty to make payments to Allied and Asso
ciated States.126 In this context, it must be stressed that the post-war reparations
regime is a legal consequence of the waging of warby a State and of the !osses
caused by it. This duty of compensation is a necessary legal consequence of the
application of the reparations regime, which is embodied in general interna
tional law.
''" See above paras. 5.38 et seq. - 135 -
5.48 Practice outside the relevant treaty or treaties is important to assess the custom
127
ary character of the provision in question. In the present case, such practice
confirms the conclusion reached above. The Commander in Chief of the United
States Forces of Occupation in German y, for example, has given the following
instruction in 1947:
"You will attempt to obtain Control Council recogmtton of the
principle of compensation for property taken for reparation or
where it has been necessary to destroy property under the agree
ments for economie disannament, such compensation to constitute
a charge against the German economy as a whole." 128
This instruction was given independently of any existing treaty obligation at
that time. It is evidence of the existing conviction that the post-war reparations
regime necessarily was supplemented by this duty of compensation.
5.49 In the present case, there is a pattern not of bilateral but of multilateral treaties
with a practically identical structure concerning this duty. The best explanation
for this identîty is the existence of a conviction that a rule of customary interna
tional law required such provision in the relevant treaties. This conviction was
then reflected in the relevant treaty provisions. As is shown by the instruction
quoted above, this conviction was expressed even irrespective of any treaty
provision. In combination with the necessity of such a provision (since ether
wise the system could not achieve its object) which reflects the opinio necessi
129
tatis as referred to by Verdross, the reflection in the treaties as well as the
M. Villiger, Customary International Law and Treaties, 192nded., Kluwer, The Hague, 1997,
p. 183.
'" Directive ta the Commander in Chief of the US Forces of Occupation, JCS 1779/1947, No. 16 d,
quoted by I. Seidl-Hohenveldern, Entschadigungspflicht der Bundesrepublik for reparationsbe
zogenes AuslandsvermOgen. VOlkerrechtliche Begründung, Verlagsgesellschaft Recht und Wirt
schaft, Heidelberg, 1962, lOO.
A. Verdross, Die Quel/en des universeilen Volkerrechts, Rombach, Freiburg (Breisgau), 1973, p.
115. - 136-
acts isolated from any treaty are sufficient to prove the existence of a rule of
customary international law in this regard.
5.50 This conclusion on the existence of a nonn of customary international law gen
erating a duty of compensation is corroborated by the interpretation of Chapter
Six of the Settlement Convention in the light of its abject and purpose. The ex
istence of this customary norm was also explicitly recognized by Gennany in
the process of the conclusion of the Settlement Convention.
5.51 By signing and ratifying the provision in Article5 of the Settlement Conven
tion, Germany accepted the confirmation of its general duty to compensate
former owners. The existence of such a "general principle" was recognized by
the Federal Government in its Explanatory Memorandum to the Settlement
Convention of21 July 1952 (Annex 22). Subsequent statements confirmed this
position.In a statement before the German Federal Constitutional Court dated
14 August 1953 (Annex 47) the Federal Govermnent made clear that:
"Die Enteignung des deutschen AuslandsvermOgens erfolgt zugun
sten Deutschlands zwecks Abtragung der ihm obliegenden politi
schen Reparationsschuld. Daher ist die Bundesrepublik verpjlich
tet, die liquidierten Eigentümer gemiifi den Bestimmungen ihres
Grnndgesetzes zu entschiidigen. Um diese Entschiidigungspjlicht zu
begründen, bedarf es lŒinerbesonderen vertraglichen oder gesetz
lichen Grundlage; sie ergibt sich aus den dem Institut der Enteig
nung zugrundeliegenden "allgemeinen Rechtsgrnndsatzen "."
"The expropriation of the German extemal assets take place to the
benefitof Gennany in order to pay off the political reparation debt
incurnbent on it. For this reason, the Federal Republic is obliged to
indemnify the liquidated owners according to the provisions of
their constitution. No particular contractual or legal base is required
for substantiating this obligation towards compensation; it ensues
from the 'general legal principles' on which the expropriation insti
tutionîs based."
Thus, Article 5 and its duty to compensate is declaratory in nature, i.e. it reaf
firms general international law, which was as such recognized by Germany. - 137 -
5.52 The Termination of Article 5 by the Agreement of 27/28 September 1990 (An
nex 19) dîd not change the general duty of Germany to compensate. Accordîng
to Article 7 of the Two-Plus-Four-Treaty (Annex 18), the rights and responsi
büities of the Four Powers relating to Berlin and Germany as a whole termi
nated, witb the result that the corresponding, related quadripartite agreements,
decisions and practices were terminated. As regards the Settlement Conven
tion, an Agreement was reached between the Govemments of the Federal Re
public of Germany, the French Republic, the United Kingdom of Great Britain
and Northem Ireland and the United States of America, following an Exchange
of Notes on 27/28 September 1990 (Annex 19). This Agreement reads in part:
"1. The Convention on Relations between the Three Powers and
the Federal Republic of 26 May 1952 ... ("the Relations Conven
tion") shall be suspended upon suspension of the operation of quad
ripartite rights and responsibilities with respect to Berlin and to
Germany as a whole, and shall terminate upon the entry into force
of the Treaty on the Financial SeUlement with respect to Germany,
signed at Moscow on 12 September 1990 ("the Two-Plus-Four
Treaty").
2. Subject to paragraph 3 below, the Convention on the SeUle
ment of Matters arising out of the War and the Occupation of 26
May 1952 ... ("the Settlement Convention") shall be suspended and
shall terminate at thesame time as the Relations Convention; ...
3. The following provisions of the Settlement Convention shall,
however, remain in force: ...
Chapter Six:
Article 3,paragraphs 1 and 3
"
5.53 The Agreement did not deal with the reparation issue more explicitly- contrary
to the original conception of Article 1 (1) of Chapter Six of the Settlement
Convention. Thus, itwas clearly not intended to deviate from the post-war
reparations regime as established and recognized by Chapter Six of the Settle- - 138-
ment Convention. The view was confirmed by the German delegation in the
course of the bilateral consultations with Liechtenstein.30
5.54 As an exception to the general termination of the Settlement Convention, the
Exchange of Notes on 27/28 September 1990 confirms Article 3 (1) and (3) of
Chapter Six of the Settlement Convention, which remain in force. The non
objection and inadrnissibility rule in Article 3 thus became permanent, while
Article 5, Germany's obligation to compensate former owners of property
seized pursuant tc the measures referred to in Article 3, was terminated.
5.55 The duty to grant compensation to former ovvnersofseized property (Article 5)
is a consequence of- that is to say, is entailedby - the non-objection and inad
missibîlity rule of Article 3 (1) and (3) of Chapter Six of the Settlement Con
vention. It was meant to preserve the complementary interests of the former
owners, interests that continue to exist in view of the newly confirmed non
objection and inadmissibility rule.
5.56 The Agreement of 27/28 September 1990 (Annex 19) did not depart from the
concept of the post-war reparations regime under customary law to pay com
pensation as reflected in Article 5. The text does not contain anything to that
effect.On the contrary, in the bilateral consultations of 14 June 1999 Liechten
stein was informed by the Head of the German delegation that Article 5 of
Chapter Six of the Settlement Convention, reflecting the duty of compensation,
bad only been abrogated in 1990 because it was thought that it bad become ob
solete on the grounds of sufficient precautionary measures, and that there were
no cases left to compensate. This view is reaffirmed, again, by the fact that the
German govemment concluded the agreement without participation of parlia
ment as it was approved by the Federal Constitutional Court. Had Gennany
considered the Agreement of 1990 a lex specialis replacing a general rule of
DO
See above paras. 3.42 et seq. - 139-
customary international law, parliamentary assent would have been needed ac
cording to Article 59 of the German Basic Law. 131
5.57 The German Explanatory Memorandum fumished in connection with the con
clusion of the Settlement Convention (Annex 22) as well as the conclusion of
the Exchange of Notes of 1990 (Annex 19) prove that Germany considers itself
bound by the norm of customary international law regarding the duty to com
pensate individuals whose property was used for post-war reparations pur
poses.
5.58 The inclusion of Liechtenstein property into the reparations regime did not re
lease Germany from the duty to compensate the former Liechtenstein owners.
It has to be stressed that Liechtenstein nationals rernained foreigners in the le
gal sense for Germany, irrespective of the qualification of Liechtenstein prop
erty as "German" property. Since Liechtenstein nationals have remained for
eigners in the legal sense, the duty to compensate foreigners which was ex
plained above also applies in such a situation. Liechtenstein nationals suffered
from reparation measures of other States, which addressed Germany as a State
but were satisfied by the private property of Liechtenstein nationals. The cause
for these reparation measures was the conduct of Germany as a State during
World War II. The duty of compensation of foreigners exists even if Germany
considers the measures taken against Liechtenstein property as lawful. Ger
many remains under the duty to compensate Liechtenstein nationals for the
lasses suffered by these measures.
"' Art. 59 Basic Law reads as follows:
(1) The Federal President represents the Federation in its international relations. He concludes
treaties with foreign states on behalf Federation. He accredits and receives envoys.
(2) Treaties which regulate the political relations with the Federation to matters of Fed
eral legislation require the consent or participation, in the form of a Federal law, of the bodies
competent in any specifie case for such Federal legislation. For administrative agreements the
provisions conceming the Federal administration apply mutatisdis." - 140-
CHAPTER6
UNJUST ENRICHMENT AND GERMANY'S CHANGE OF POSITION - 141 -
A. Introduction and overview
6.1 In the two previous Chapters, Liechtenstein bas established Germany's respon
sibility for its breaches of several rules and principles of international law. The
purpose of the present Chapter is to show that, independently ofthese breaches,
Gennany is liable towards Liechtenstein under two related principles of inter
national law. These are the principles ofunjust enrichment and detrimental re
liance or change of position. Beth are underpinned by the fundamental princi
ple of good faith; beth are aimed at achieving an equitable result in tenns of the
relations of the States concemed. These causes of action do not necessarily irn
ply (though they do not exclude) an intemationally wrongful act. In one case a
State is enriched without cause, i.e. unjustly, at the expense of another or of its
nationals. In the ether case, a State, having adopted or agreed on sorne policy
on a matter of concern to another State, has unjustifiably changed its position,
to the detriment of the latter State or its nationals.
6.2 Beth principles stem from a more general concept, well known to public inter
nationallaw, which is the principle of good faith. This fundamental rule, which
132
has been recalled on varions occasions by the International Court, requires a
State to act in a way compatible with what it expects from another State in the
same circumstances. Thus for example a State does certainly not expect an
other State to keep properties acquired without a well-founded cause and caus
ing prejudice to this second State. Such conduct is irreconcilable with the re-
See Nuclear Tests {Australia v France}, 20 December 1974, l.C.J. Reports 1974, pp. 253 et seq.,
p. 268, para. 46; Border and Transborder Armed Action (Nicaragua v Honduras), Jurisdiction
and Adnùssibility,20 December 1988, l.C.J. Reports 1988, pp. 69 et seq., p. 105, para. 94; Bin
Cheng, General Principles of Law as Applied by International Courts and Tribunats, Grotius,
Cambridge, 1987, p. 105, esp. No.1-5,and authorities referred to in No. 180. Authorities on the
related doctrineof "abus de droit" in international law include: Free Zones case, 7 June 1932,
PCIJ Ser. A!B No. 46 (1932), pp. 93 et seq., p. 167; Oscar Chinn case, 12 December 1934, PCIJ
Ser. A!B No. 63 (1934), pp. 62 et seq., p. 86; Fisheries Case (United Kingdom v. Norway}, 18
December 1951, !.Cl. Reports 1951, pp. 116 et seq., p. 142. - 142-
quirement of good faith, as well as the most firmiy admitted considerations of
justice and equity.
6.3 These principles apply to the facts of the present case in the following way. On
the one band, it is apparent that, by including the Liechtenstein assets in the
reparations regime, German y bas enriched itself unjustly, quite apart from the
issue of the lawfulness of those takings (Section B). On the ether hand, by
radically changing its position conceming the status of the Liechtenstein's as
sets since 1995, having earlier adopted a lawful policy in agreement with
Liechtenstein as to those assets, Germany bas caused an irremediable Joss to
Liechtenstein for which îtowes compensation (Section C).
B. Germany's unjust enrichment at Liechtenstein's expense
1. The principle ofunjust enrichment (enrichissement sans cause)
in international law
6.4 Weil known in ali systems of domestic law, the princip le of unjust enrichment
is a general principle of law, and as such a rule of general public international
law. It has been applied by international tribunals in arder to grant remedies in
cases ofunjustified wealth transactions under international law. The content of
the principle can therefore be inferred from the international jurisprudence it
self.
(a) Unjust enrichment as a general principle of law
6.5 It is widely acknowledged that the general principles of law mentioned in Arti
cle 38 (1) (c) of the Statute ofthe International Court of Justice are an autane
mous source of public international law, based on the application in the inter
national sphere of "the general principles of municipal jurisprudence, insofar as - !43-
133
they are applicable to relations of states". In ether words, a rule must be con
sidered as a general principle of law (i) if it is applied in the main systems of
municipal law and (ii) if it is "transposable" in international law, i.e., it is not
inconsistent with any general principle of or applicable rule of public interna
tional law.
6.6 The principle of unjust enrichment meets beth conditions: it applies in many, if
not ali, domestic legal systems and it is entirely compatible with the structure
of international law in which it bas been implemented on a number of occa-
SlOTIS.
(i) Domestic legal systems recognize unjust enrichment as
basis for compensation or restitution
6.7 Prohibition of unjust enrichment is as ancient as law itself. Roman law already
recognised the necessary repayment of patrimonial advantages reached without
any legal ground. The Corpus Juris Civilis and many writings of Roman law
yers and authorities stated that:
"iure naturae aequum est neminem cum alterius detrimento et ini
134
uriafieri locupletiorem."
Translation:
"For this by nature is equitable, that no one be made richer through
another's loss."
Sir R. Jennings and Sir A. Watts, (eds.) Oppenheim's International Law, Vol. 1, 9med., Long
man, London, 1992, p. 37; see also, G. Ripert,es règlesdu droit civil applicables aux rapports
internationaux. Contributionàl'étudedes principes générauxdu droit visésau Statut de la Cour
permanente de Justice internationale", 44 Recueil des cours, 1933-II, pp. 569 et seq., pp. 571-
587; P. Daillier and A. Pellet, Droit international public (Nguyen Quoc Dinh), L.G.D.J., Paris,
6thed., 1999, pp. 344-348.
0.50.17.206 Pomponius libro nono ex varüs lectionibus, cited in J. Hallebeek, "Developments în
Mediaeval Roman Law", m E.J.H. Schrage (ed.), Unjust Enrichment. The Comparative Legal
History of the Law of Restitution, Duncker & Hurnblot, Berlin, 1999, pp. 59 et seq., p. 61. - 144-
Relief for unjust enrichment is thus described as a fundarnental legal principle
inspired by equity and even by the law of nature. In this sense, the princip le has
a bearing on a wide variety of issues concerning wealth transactions: contracts,
property, delicts or torts, etc. But the specification of the princip le in the con·
text of the positive law of contract or delict does not mean that it bas lest its
generating capacity. On the contrary there has been a substantial development
in the law of restitution and cognate fields in modern times, based upon such a
general princip le.
6.8 As a matter of fact, ali or virtually ali domestic legal systems incorporate this
principle and have organised their legal provisions concerning wealth around
it. Relief is granted for advantages reached not only for wrongful acts but also
for acts (for example in cases of frustration of contract) in the absence of any
wrongful act on the part of the defendant. 135 By its very nature, civil law aims
at avoiding unjust enrichment of a persan as a consequence ofthe loss endured
by another and has drawn a large range of legal consequences from this broad
principle. Even rules related to the calculation of compensation are influenced
by considerations based on unjust enrichment. Moreover, severa! codifications
have adopted broad provisions expressing the generic principle of unjust en
richment.136
6.9 Even when a specifie cause of action, for example in contract or tort, is not
available, most domestic legal systems have developed remedies in arder to
deal with unjustified acquisitions of wealth, i.e. acquisitions lacking a cause
and thus unjustified in legal terms. Such cases of enrichment, lacking a legal
"cause", entitle the party which bas suffered damage to recover compensation.
This possibility is expressly reserved in certain cases by Article 27 (b) of the ILC's Articles on
Responsibilityof States for Intemationally Wrongful Acts: ILC Report, 2001, UN General As
sembly, Official Records,/56/10, p. 210.
Article 1382 Code civil (France), Article 1041 Allgemeines Bürgerliches Gesetzbuch (Austria),
'" Article 62-67Schweizerisches Obligationenrecht (Switzerland), Article 6:162 Burgerlijk Wet
boek (the Netherlands), etc. - 145-
6.10 German Civil Law contains very clear provisions in this respect, based on Sec
tion 812 (1), of the German Civil Code which states:
"Wer durch die Leistung eines anderen oder in sonstiger Weise auf
dessen Kosten etwas ohne rechtlichen Grund erlangt, ist ihm zu
Herausgabe verpjlichtet."
Translation:
"A persan who bas gained something by the performance of an
ether or in any other way at the other's expense without legitimate
ground is bound to make restitution."
German jurisprudence initially established a sophisticated network of different
unjust enrichment remedies and conditions: more recently the decisions have
137
developed towards a more general principle not imprisoned by categories.
138
Similar developments have occurred in other countries.
6.11 In France, the courts have developed a distinct remedy system in cases of un
justified enrichment. For a long time, French judges, in the absence of a textual
basis for unjust emichment claims, developed remedies in order to close the le
gal gap. 139 In a famous decision concerning unjust enrichment, the French
Cour de Cassation stated that the actio de in rem verso:
!3ï See, e.g., Decisions of the Federal Court of Justice in civil law matters (Entscheidungssammlung
des Bundesgerichtshofes in Zivilsachen, BGHZ) Vol. 122, pp. 46 et seq., p. 52.; Vol. 89, pp. 376
etseq., p. 378; VoL 67, pp. 75 et seq., p. 77.
See, e.g., Articles 1021, 1042 and 1043 Allgemeines Bürgerliches Gesetzbuch (Austria) or Arti
cle 2041 Italian Civil Code; for further references, see F. Francioni, "Compensation for Nation
alisationof Foreign Property: The Borderland between Law and Equity", 24 International &
Comparative Law Quarterly 1975, pp. 255 et seq., p. 273.
See E.J.H. Schrage & B. 1\icholas, "Unjust Enrichment and the Law of Restitution: A Compari
son", in E.J.H. Schrage (ed.), Unjust Enrichment. The Comparative Legal History of the Law of
Restitution, Duncker & Humblot, Berlin, 1999, pp. 9 et seq., pp. 22-24; J.P. Dawson, Unjust En
richment. A Comparative Analysis,Little & Brown, Boston, 1951, pp. 92 et seq. - !46-
"dériv[e]du principe d'équitéqui défendde s'enrichir aux d~ens
d'autrui et n'[a] étéréglementéepar aucun texte de nos lois." 14
Indeed, the Court established clearly that actio de in rem verso is itself based
on the more fundamental princip le of equity prohibiting unjust enrichment.
6.12 In the common law, an independent ground for reliefbased on unjust enrich
ment does not seem to be as old as in the Continental law system. This is a re
suit of the different approach to the question of general princip les of law in the
two :fundamental different systems. For a long time, English law seerns not to
have recogrùsed a general theory of unjust enrichment as such, but developed
specifie remedies for situations which are indeed classified as unjust enrich
ment circumstances by civil law systems. 141But, far from ignoring the princi
ple of unjust enrichment, English law only treated it differently and, in any
case, it has now recognised unjust enrichment as an independent cause of ac
142
tion. For its part, the American Law Institute in its Restatement declared in
general terrns that:
"A persan who has been unjustly enriched at the expense of another
143
is required to make restitution to the other."
"" Cour de cassation, Chambre des Requêtes, 15 June 1892, Julien Patureau v. Boudier Dalloz
1892.1.596; Sirey, 1893.I.281, note Labbé.
"' Orakpo v Manson Jnvestment Ltd (1978) A.C. 95, p. 104; E. J.H. Schrag& B. Nicholas, "Un
just Enrichment and the Law of Restitution: A Comparison", in Eltjo J.H. Schrage (ed.), Unjust
Enrichment: The Comparative Legal History of the Law of Restitution, Duncker & Humblot,
Berlin, 1999, pp. 9t seq., p. 10; E. Wahl, "Die ungerechtfertigte Bereicherung der Bundesrepu
blik Deutschland ais Rechtsgrundlagfürdie Ansprüche der Reparationsgeschi:i.digten", 26 Juris
tenzeitung1971, pp. et seq. 715, p. 718; F. Francioni, "Compensation for Nationalisation of Fo
reign Property: The Borderland between Law and Equity", 24 International & Comparative Law
Quarterly 1975, pp. 255 et seq., pp. 273-274.
See E.J.H. Schrage& B. Nicholas, ibid, pp. 9 et seq., pp. 10 and 27; F. Francioni, ibid, pp. 255 et
'"
seq,p. 274.
American Law lnstitute, Restatement of the Law of Restitution, 1937, p. 12, § 1.
'" - 147-
In common law systems there has been an enormous development of the law of
restitution based on this principle. 144
6.13 Legal systems based on Islamic law also recognise the principle of unjust en
richment.145
6.14 For these reasons, it can be concluded that the principle of unjust enridunent
constitutes a general principle of law common to the main legal systems. Even
if there are certain differences in the application of this principle in the differ
146
ent legal systems, the underlying principle is the same. Ali legal systems
provide for restitution or compensation in the case of someone's enrichment,
147
causing a loss to someone else, without any legal basis.
For a selection of leading and recent casin conunon law jurisdictions, see generally, Vemicos
Shipping Co. v. United States, 349 F, 2d, 465 (1965); 42 ILR, 1971, pp. 186 et seq., pp. 187-188,
Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd {1979) 3 Ail ER 822; Lipldn Gor
man v Karpnale Ltd (1991) 2 AC 548; Derby v Scottish Equitable pic {2001) 3 Ail ER 818; Ban
que Financière de la Citév Parc (Battersea) Ltd (1998) 2 WLR 475; David Securities PIL v
Commonwealth Bank of Australia (1992) 175 CLR 353; Pavey & Matthews Pty Ltd v Paul
(1987) 162 CLR 221; Rural Municipality ofStorthoaks v Mobil Cil Canada (1975) 55 DLR (3d)
1; RBC Dominion Securities !ne v Dawson etal. (1994) 111 DLR (4th)230; Deglman v Guaranty
Trust Co. (1954) 3 DLR 785 (S.C.C.).
See the findings of the Iran-United States Claims TribWlal in Award Ko. 35-219-2, 30 March
'"
1983, Benjamin R. lsaiah v. Bank Mellat, 2 fran-United States Claims Tribunal Reports, 1983-1,
pp. 232 et seq., pp. 236-7 and Award No. 207-217-2, 5 December 1985, Shannon and Wilson,
!ne.v. Atomic Energy Organization of fran, 9/ran-United States Claims Tribunal Reports, 1985-
Il, pp. 397 et seq., p. 402; see also: Arbritral Tribunal Mahmassani Award, 12 April 1977, Lib
yan American Oil Company (L!AMCO v. Government of the Libyan Arab Republic ), 62 ILR, pp.
140etseq., pp. 175-176.
F. Francioni, "Compensation for Nationalisation of Foreign Property: The Border1and between
Law and Equity", 24/nternational & Comparative Law Quarter/y, 1975, pp. 255 et seq., p. 274;
C.H. Schreuer, "Unjustified Emichment in International Law", 22 American Journal of Com
parative Law, 1974, pp. 218 et seq., p. 283.
'" See also: Mexico-United States Claims Commission, Decision, July 1931, Diekson Car Wheel
Company (U.S.A.) v. United Mexiean States, UNR!AA, Vol. IV, pp. 669 et seq., p. 676; Georges
Ripert, "Les règles du droit civil applicables aux rapports internationaux. Contribuàil'étude
des principes générauxdu droit visésau Statut de la Cour permanente de Justice internationale",
Recueil des Cours 1933-Il, Vol. 44, pp. 569 et seq., p. 631; F. Francioni, ibid, pp. 255 et seq., pp.
273-274. - 148-
6.15 It thus appears that the principle of unjust emichment is more than an "expres
sion of noble sentiments inspiring the creators of the law". 148 Rather it îs a
foundational princîple underlying restitution or compensation in numerous do
mestic legal systems.
(ii)The principle is transposable to international law
6.16 There is no conceptual or practical obstacle to the transposition into public in
ternational law of this general principle. There is nothing in international law,
whether in its positive rules or its general principles, that excludes or contra
diets the principle of unjust enrichment. On the contrary, as explained below,
the princip le is received at the intemationallevel.
6.17 It is true that sorne authorities have denied that the principle of unjust enrich
149
ment can be transposed at the international level. However, the basis for
these doubts is, above ali, an over-reliance (amounting to apetitio principii) on
the difficulties of the transposition of rules having a civil law origin into public
international law which regulates the relations between sovereign States, and
which bas not the same degree of precision or development as domestic law.
6.18 No doubt general principles of domestic law systems cannet be transposed
150
"mechanically" into internationallaw. As Judge Sir Arnold McNair stated in
''" C.H. Schreuer, "Unjustified Enrichment in International Law", 22 American Journal of Com
parative Law, 1974, pp. 218 etseq., p. 281.
'" See G. Ripert,"Les règles du droit civil applicables aux rapports internationaux. Contribàtion
l'étudedes principes générauxdu droit visésau Statut de la Cour pennanente de Justice interna
tionale", Recueil des Cours, 1933-II, Vol. 44, pp. 569 et seq., H. Pazarci, "La responsabi
lité internationale des Étaàsl'ocassion des contrats conclus entre États et personnes privées
étrangères",79 Revue généralede Droit international public, 1975, pp. 354 et seq., pp. 415-416.
,,
E. Jiménez de Aréchaga, "International Law in the Past Third of a Century'', Recueil des Cours,
1978-I, Vol. 159, p. 1 et sep.,300; see also e.g.: F. Francionî, "Compensation for Nationalisa
tion of Foreign Property: The Borderland between Law and Equity", 24 International & Com
parative Law Quarter/y, 1975, pp. 255 et seq., p. 275. - 149-
a celebrated separate opinion in the Status of South West Africa advisory opin
ion of 1950:
"International law has recruited and continues to recroît many of its
rules and institutions from private systems of law. Article 38 (1) (c)
of the Statute of the Court bears witness that this process is still ac
tive and it will be noted that this article authorizes the Court to 'ap
ply ... (c) the general principles of law recognized by civilized na
tions'.The way in which international law borrows from this source
is not by means of importing private law institutions 'lock, stock
and barrel', ready-made and fully equipped with a set ofrules ... In
my opinion, the true view of the duty of international tribunals in
this matter is to regard any features or terrninology which are remi
niscent of the mles and institutions of private law as an indication
of policy and princip les rather than as direct!y importing these rules
151
and instîtutîons."
6.19 Beyond the differences in the varions municipal legal systems, the general idea
lyîng under the principle is certainly not unfamiliar in international law. Furet
asserts:
"C'est un principe d'équitétrès généralque nul ne peut s'enrichir in
justement aux dépens d'autrui. Il a étédégagépar le droit privé,
mais il y a toutes raisons de penser qu'il demeure valable en droit
mternatwna pu tc."1" 152
Even Ripert, who presumed that unjust enrichrnent is not easily transposable
into public international law, nevertheless concluded:
"Il ne faut pourtant pas renoncer délibérémentà ce principe dans le
droit des gens... Il n'y a aucune raison pour ne pas dire qu'un Etat
ne saurait s'enrichir injustement ou sans cause aux dépens d'un au-
International Status of South-West Africa, Advisory Opinion, Il July 1950, l.CJ Reports 1950,
"' pp. 128 et seq., p. 148.
'" M.-F. Furet, "L'application des concepts du droit privéen droit international public", 68 Revue
généraide Droit international public64, pp. 887 et seq., p. 901. - 150-
tre. L'application de cette règle pourra geut-être un jour donner le
moyen de réparercertaines injustices." 1
6.20 There is no incompatibility between the unjust enrichment principle and public
international law. As far as wealth transactions are concerned - and this is the
case more and more often bet\\leen States and from a public international law
perspective - equitable considerations surrounding the remedies for unjust en
richment could be applied even between States, or between States and non
State entities. A State may not enrich itself without any legal basis, causing
thereby a Joss to another State or persan.
6.21 Thus the concept ofunjust enrichment is received in public international law; it
inspires many of its rules and nowadays constitutes a valid international legal
princip le.
(b) The principle ofunjust euricbment bas been incorporated
into international law
6.22 The principle of unjust enrichment bas been incorporated in public interna
tional law as both, a fundamental principle goveming and inspiring rules oflaw
and a separate cause of action.
(i) Unjust enrichment as a basic principle of international law
6.23 The principle of unjust enrichment inspires various legal regimes in public in
ternational law. Thus, in the law ofState succession, it is recognised that a suc
cesser State is under an obligation to reimburse the debts of its predecessor as
G. Ripert, "Les règles du droit civil applicables aux rapports internationaux. Contribution à
l'étudedes principes générauxdu droit visésau Statut de la Cam permanente de Justice interna
tionale", Recueil des Cours, 1933-II, Vol. 44, pp. 569 et seq., p. 632. - 151 -
far as it has derived benefit from them. 154 And even if, practically, the decisive
criterion is laid on the financial capacities of the State (in relation, of course, to
what it received from its predecessor), unjust enrichment bas to be seen as the
rea 1JUStifrcatron o ft ese ru es. 155
6.24 The principle has also shaped the international law of compensation for expro
priation of property. 156 The legal basis ofthe obligation to compensate in case
of lawful takings of property is founded in the princip le of unjust enrichment.
Indeed, in the absence of any intemationally wrongful act, the international re
sponsibility of the expropriating State is not entailed and it cannat be deemed
to have a duty to compensate the foreign investor for its !osses on the basis of
the law of responsibility. Therefore, the ratio legis for the duty to compensate
is the principle of unjust enrichment and this is confirmed by State practice. As
D.P. O'Connell put it: "The juridical justification for the obligation to pay
compensation is to be found in the concept of unjust enrichment, which lies at
the basis of the doctrine of acquired rights, and which is formalised by refer
ence to the international standard of civilised society." 157
6.25 Finally, the concept ofunjust enrichment also finds application conceming the
evaluation of compensation, in cases of lawful expropriations as weil as within
the framework of State responsibility for internationally wrongful acts. The
amount of the compensation bas to be determined in such a way that it does not
See articles 37,40 and 41 of the 1983 Vienna Convention on Succession of States in respect of
'"
State Property, Archives and Debts, 7 April 1983; See also: M.-F. Furet, "L'application des
concepts du droit privéen droit international public", 69 Revue généralede Droit international
public 1964, pp. 887 et seq, p. 901.
See further D.P. O'Connell, "Unjust Emichment", 5 American Journal of Comparative Law
'" 1956, p. 2.
See A.D. McNair, "The Seizure ofProperty and Enterprises in lndonesia",6 Netherlands Inter
'" national Law Review 1959, pp. 218 et seq., pp. 239-242; H. Dagan, Unjust Enrichment. A Study
of Private Law and Public Values, CUP, Cambridge, 1997, ch. 6 and references.
'" D.P. O'Connell, International Law, Vol. Il, Stevens& Sons, London, 1970, pp. 780-781; see
also:E. Jiménez de Aréchaga, "International Law in the Past Third of a Century'', Recueil des
cours, 1978-I, Vol. 159, p. 1,pp. 299-300. - !52 -
amount to an unjustified enrichment neither of the injured party nor of the
wrongdoer. The exact balance of the enrichment and the loss îs to be estab
lished and to be corrected. Every surplus or shortfall in the compensation
158
would result in an lUljustified enriclunent of one of the parties. It appears
therefore that unjust enrichment is the underlying principle explaining the full
(and not more than full) compensation principle.
(ii) Unjust enrichment as a cause of action
6.26 As clearly shown by international precedents, restitutionary remedies quite of
ten are based on the concept ofunjust enrichment.
6.27 The Arbitral Tribunal constituted between the United States and Peru in arder
to decide the Landreau Clairn conceming the payment of compensation for
performance of a later denounced contract stated:
"The Govemment got the information on the footing of the contract
of 1865 and having repudiated that contract by the decree of 12th
December, 1868, they are bound to pay on a quantum meruit for 159
the discoveries which they appropriated for their own benefit."
6.28 Similarly, in the William A. Parker Case, the Mexico-United States Claims
Commission based its decision on the principle of unjust enrichment and
awarded compensation in the absence of any contract or tortious act, thus rec
ognising unjust enrichment as a cause of action.160
''" See, e.g., Arbitral Tribunal (Max Huber), Award, 1 May 1925, Spanish Zone of Maroco Claims,
UNRIAA, Vol. II, pp. 615 et seq.. pp. 733-735; L Seidl-Hohenveldem, "L'évaluationdes dom
mages dans les arbitrages transnationaux",nnuaire français de droit international, 1987 pp.
7 et seq., p. 2F.Francioni, "Compensation for Nationalisation of Foreign Property: The Bor
derland between Law and Equity", 24 Internationa& Comparative Law Quarter/y 1975, pp.
255 et seq., pp. 277-281; C.H. Schreuer, "Unjustified Enrichment in International Law", 22
American Journal of Comparative Law 1974, pp. 281 et seq., pp. 286-287.
'" Award, 26 October 1922, UNRIAA, VoL I,pp. 347 et seqp. 364.
"" Mexico-United States Claims Commission, Interlocutory decision, 31 March 1926, William A.
Parker (U.S.A.) v. United Mexican States, UNRIAA, VoL IV, pp. 35 et seq., p. 40. - 153-
6.29 Even more direct! y, the Tribunal in the Lena Goldfields Arbitration found the
ground ofrecovery in the unjust enrichment principle:
"On ordinary legal principle this constitutes a right of action for
damages, but the Court prefers to base its award on the principle of
'unjust enrichment', although in its opinion the money result is the
same."J6J
6.30 Similarly, in various awards, ether arbitral bodies granted indemnity to appli
cants to the extent of actual profit gained by the respondent. 162
6.31 Under Article V of the Declaration of the Government of the Democratie and
Popular Republic of Algeria conceming the Settlement of Claims by the Gov
ernment of the United States of America and the Govemment of the Islamic
Republic of Iran (Claîms Settlement Declaration) of 19 January 1981, 163 the
Tribunal is to apply "principles of commercial and international law". The Iran
United States Claims Tribunal has recognised the principle of unjust emich
ment as a restitutionary remedy. For example Chamber 1 of the Tribunal as
serted:
"The concept of unjust enrichment had its origins in Roman Law,
where it emerged as an equitable deviee 'to caver those cases in
which a general action for damages was not available'. It is codified
or judicially recognised in the great majority of the municipal legal
systems of the world, and is widely accepted as having been as-
Arbitral Tribunal Award, 3 September 1930, Lena Goldjields, Ltd. v_USSR, full text of award
"' reproduced in A. Nussbaum, "The Arbitration between the Lena Goldfields Ltd and the Soviet
Government", 36 Cornell Law Quarter/y 1950, pp. 31 et seq., p. 51.
,., Arbitral Award, Thomas C. Baker's Claim (United States v. Mexico), in J. B. Moore, 4 History
and Digest of Arbitrations to which the United States have been a Party 1898, p. 3668; Hungaro
Belgian Mixed Arbitral Tribtmal, 29 October 1925, Sucrerie de Roustchouk v. Etat hongrois, 5
Recueil des decisions des T.A.M., p. 772; P.C.A., Arbitral Award, 27 July 1956, Lîghthouses
Case (merits), UNRIAA, Vol. XIIpp.155 et seq.p.253.
'"' 1 Iran-United States Claims Tribunal Reports, 1981-82, pp. 9 et seq., pp. 11-12. - !54-
similated into the catalogue of general Er1 4iples of law available to
be applied by international tribunals."
6.32 It is thus apparent, that unjust enrichment is a generally applied principle of
law, transplanted from municipal systems of law in international law, now
widely applied in international law, which constitutes perse a distinct cause of
action.
(c) The content of the princip le of unjust enrichment
6.33 Concerning the content of the principle, the arbitral practice bas clarified the
conditions which have to be met in arder to successfully invoke unjust enrich
ment as a restitutionary remedy. The Iran-United States Claims Tribunal
summed up these conditions in the following way:
"There must have been an enrichment of one party to the detriment
of the ether, and both must arise as a consequence of the same act
or event. There must be no justification for the enrichment, and no
contractual or other remedy available to the injured party whereby
165
he might seek compensation from the party enriched."
6.34 The four criteria are thus (a) an enrichment of one party, (b) an impoverish
ment of the other party, (c) a causallink between the impoverishment and the
'" Iran-United States Claims Tribunal, Award No. 135-33-1, 22 June 1984, Sea-Land Service, !ne.
v. The lslamic Republic of Iran, et al., 6/ran-United States Claims Tribunal Reports, 1984-Il,
pp. 149 et seq., p. 168; see alAward No. 207-217-2, 5 December 1985, Shannon and Wilson,
!ne. v. Atomie Energy Organization of Iran, 9/ran-United States Claims Tribunal Reports, 1985-
II,pp. 397 et seq., p. 402; Award No. 259-36-l, 13 October 1986, Flexi-Van Leasing, !ne. v. The
Government of the Jslamic Republic of Iran, 12 Iran-United States Claims Tribunal Reports,
1986-III, pp. 335 et seq., pp. 352-353; Award No. 295-834-2,27 March 1987, Schlegel Corpora
tion (on behalf of Schlegel Lining Teehnology GmbH) v. National !ranian Copper Industries
Company, 14/ran-United States Claims Tribunal Reports, 1987-I,p. 176 et seq.p. 180.
Iran-United States Claims Tribunal, Award No. 135-33-1,22 June 1984, Sea-Land Service, !ne.
'" v. Government of the lslamic Republie of Iran et al., 6 Iran-United States Claims Tribunal Re
ports, 1984-II, pp. 149 et seq., p. 169; see also: Award Ko. 207-217-2, 5 December 1985, Shan
non and Wilson, !ne. v. Atomic Energy Organization of Iran, 9 Iran United States Claims Tribu
nal Reports, 1985-II, pp. 397 et seq., p. 402 or Mexico-United States C1aims Commission, Deci
sion, July 1931, Dickson Car Wheel Company (U.S.A.) v. United Mexican States, UNRIAA, VoL
IV, pp. 669 et seq., p. 676. - 155 -
enrichment and, finally, (d) the absence of a cause, that is of any contractual or
legal basis of the transaction.
2. Unjust enrichment of Germany through the inclusion of the
Liechtenstein property within the reparations regime
6.35 It results from the above exposed principles that unjust enrichment can be en
visaged bath as a distinct cause of action and as a means to evaluate the dam
age sustained by Liechtenstein as a consequence of Germany's behaviour. In
both cases, the same conditions must be met:
(a) Germany must have enriched itselfthrough its acts or omissions;
(b) to the detriment of Liechtenstein;
(c) a causal link must exist between Germany's enrichment and Liechten
stein's impoverishment,
(d) without a "cause" in the legal sense, i.e. withoutjustification.
Ail four conditions are met in the present case, as will now be demonstrated.
(a) Germany's Enrichment
6.36 The present case relates to a debtor's use of other people's property in arder to
clear hîmself from his debt (or part of it) towards his crediter. Germany is a
debtor for war reparations; by including Liechtenstein's assets in the repara
tions regime, it has used them to pay part of îts debt due to Czechoslovakia,
thus clearly enrichîng îtself at the detriment of Liechtenstein.
(i)The debt and the debtor
6.37 There can be no doubt as to Germany's indebtedness towards Czechoslovakia
as a result of the post-war reparations regime. - 156-
6.38 As explained in Chapter 2 above, after the war, Gennany was subject to a strict
obligation of reparations "for the tosses caused by ber to the Allied nations in
the course of the war" (Yalta Protocol) (Annex 11). This is a continuing obliga
tion.
6.39 According ta Chapter IV (3) of the Potsdam Protoco1of 2 August 1945 (Annex
12),
"[t]he reparation claims of the United States, the United Kingdom
and other countries entitled to reparations shall be met from the
Western zones and from appropriate German extemal assets".
The Paris Agreement of 14 January 1946 (Annex 13) lîsts Czechoslovakia
among these "other countries entitled to reparatîons' for a share amounting to
3 % of Category A reparations and 4.3 % of Category B. 166Provision for pay
ment of reparations were detailed in varions legal instruments including Law
No. 63 of the Council of the Allied High Commission of 31 August 1951 (An
nex 15) and the Sett1ement Convention of26 May 1952 (Annex 16). Although
the Convention bas been partly terminated following the Exchange of Notes of
27/28 September 1990 (Armex 19), the obligation to make reparations bas
never been questioned.
6.40 It follows from the above that Germany was under an obligation to make repa
rations to Czechoslovakia for the losses sustained by the latter in the course of
the war.
(ii)The enrichment
6.41 As shown in Chapter 3 of this Memorial, until the mid 1990s, Germany had
consistently regarded the "BeneS Decrees" as contrary to international law.
Under this situation, there was no question of Germany's enrichment: the Re- - 157-
spondent State rightly considered that the Liechtenstein nationals' assets were
not part of the reparations regime and could not, therefore, be deducted from
the debt it owed to Czechoslovakia on this account.
6.42 The picture changed completely when Germany contended, following the
Pieter-van-Laer case, that the Liechtenstein nationals' assets confiscated by
Czechoslovakia bad been rightly treated as German assets, as defined by the
reparations regime. In other words, Germany now accepts that these properties
were "seized for the purpose of reparation or restitution, or as a result of the
state of war", within the meaning of Article 3 (1) of Chapter Six of the Settle
rnent Convention {Annex 16).
6.43 Henceforth, Germany includes the confiscated assets among the global amount
owed by it tc Czechoslovakia and this amount cornes as a deduction from its
debt. It thus clearly constitutes an enrichment for Germany. As acknowledged
by popular wisdom, "Qui paye ses dettes s'enrichi". This is not only a tradi
tional maxim. It is a legal principle firmly anchored in international law. In the
Raymond case, the United States-Venezuela Mixed Arbitral Commission al
167 168
ready recognized this principle. Equally, in the Aminoil case, the Arbitral
Tribunal effectively took into account the liabilities of Aminoil, stating:
"Decree Law 1\o. 124, and the measures taken under it,determined
the transfer of the Company's assets and operations on the basis of
the clause in the Concession providing for a normal completion of
its term... This way of dealing with the matter was not opposed by
Amine il. The transfer of the assets gave rise to a credit in its fa
veur, whereas that of Iiabilities created a debt. The sums due at the
See above paras. 2.10-2.12.
Mixed Claims Commission United-States Venezuela constituted under the Protocol of 17 Febru
'" ary 1903, Award, 1903, Raymond et al. (United States of America v. Venezuela), UNRJAA, Vol.
IX, pp.310 et seq., p. 314: "As the assignment ... was received in discharge of a money debt due
from De Sonneville, it is în judgment of law to be considered as the same thing as if De Sonne
ville had actually paid money to the amount agreed upon... ".
Arbitral Tribunal, Award, 24 March 1982, The Government of the State of Kuwait v. The Ameri
can lndependentOil Company (AMINOIL), 21 ILM 1982, p.976. - !58 -
date of 19 September, 1977, and paid by the Government, have to
169
be refunded by the Company".
The debts of Aminoil were, consequently, deducted from the compensation
170
owed by Kuwait for the expropriation of the concession rights. The Iran
United States Claims Tribunal proceeded in a sîmilar sense conceming a coun
terclaim "which arises out of the same contract, transaction or occurrence that
constitutes the subject matter of [the original] national's claim".171
6.44 By acknowledging that the Liechtenstein assets are part of its debt Germany
has, therefore, enriched itself since its debt has been lessened in the same pro
portions. This fact was clearly recognised by the German Govemment in its
comment of 14 August 1953 in the proceedings on the second action for a de
claratory judgment of the parliamentary group of the SPD before the Federal
Constitutional Court (Annex 47):
11
Die Enteignung des deutschen AuslandsvermOgens eifolgt zugun
sten Deutschlands zwecks Abtragung der ihm obliegenden politi
schen Reparationsschuld. Daher ist die Bundesrepublik verpjlich
tet, die liquidierten Eigentümer gemiijJ den Bestimmungen ihres
Grundgesetzes zu entschiidigen. Um diese Entschii.digungspflicht zu
begründen, bedarf es keiner besonderen vertraglichen oder gesetz
lichen Grundlage; sie ergibt sich aus den dem Institut der Enteig
nung zugrundeliegenden "allgemeinen Rechtsgrundsêitzen "."
,..
Ibid., p. 1027.
Ibid.p. 1041 et seq.
""
'" Article II, paragraph 1, of the Declaration of the Government of the Democratie and Popular Re
publicof Algeria conceming the Seulement ofClaims by the Govemment of the United States of
America and the Government of the Islamic Republic of Iran (Claims Seulement Declaration) of
19 January 1981, 1 Iran-United States Claims Tribunal Reports 9, 1981, 1982. See also G. H.
Aldrich, The Jurisprudence of the Iran-United States Claims Tribunal, Clarendon, Oxford, 1996,
p.110 et seq.; P. Daillier (ed.), "Tribunal irano-américain de réclamations", 46 Annuaire français
de droit internationa/2000, pp. 326 et seq., pp. 339-342. Even outside any counterclaim consid
eration, the very same Tribunal accepted cornpeting debts to be cornpensated between them
selves (see, e.g., Iran-Unitedes Claims Tribunal, Award No. 419-128/129-2, 30 March 1989,
Sedco, !ne. for itself and on behalf of Sedco International, S.A. v. Iran Marine Jndustrial Com
pany, et al., 21/ran-United States Claims Tribunal Reports 31, 1989-I, pp. 53 et seq.- deducing
from the compensation accorded to the clairnant a debt owed to the respondent). - !59-
Translation:
"The expropriation of German extemal assets takes place to the
benefit of Germany in arder topa y off the political reparations debt
incumbent on it.For this reason, the Federal Republic of Germany
is obliged to indemnify the liquidated owners according to the pro
visions of their constitution. No particular contractual or legal base
is required for substantiating this obligation towards compensation;
it ensues from the 'general legal principles' on which the expropria
tion institution is based."
(b) Liechtenstein's correlative impoverishment
6.45 The second aspect of Germany's unjust emîchment in the present case is self
evident. Germany bas been enriched at least in the same measure as the Liech
tenstein nationals have been impoverished. They have Iost the use of the assets,
the incarne deriving from them and any possibilities of liquidating them. In this
respect, îtappears that the Joss sustained is even higher thau Germany's en
richment, since the owners of the confiscated assets have been deprived not
only of their properties (damnum emergens), but also, in many cases (agricui
turallands, factories) oftheir expected profits (lucrum cessans).
(c) The link between Germany's enrichment and
Liechtenstein's impoverishment
6.46 The behaviour of Germany is entirely independent from the lawfulness or
unlawfulness of Czechoslovakia's acts. As explained above, 172the principle of
unjust enrichment applies independently of any unlawfulness of the act gener
ating the enrichment: whether the post-war decisions of Czechoslovakia were
lawful or not, the fact is that they were at the origin of the deprivation ofprop
erty endured by Liechtenstein and îts nationals, and that, by endorsing them,
Germany has enriched itself. Thus, Germany's enrichment only generated from
the Germany's decision, afier 1995, to include the Liechtenstein property in the
See above para. 6.8. - 160-
reparations regime. Without the decision taken by Germany the impoverish
ment of Liechtenstein and its nationals would not have resulted in an enrich
ment for Gennany and the whole matter would have remained res inter alios
acta. And this holds true whether Czechoslovakia's acts were lawful or not.
6.47 In other words, the direct causation of Germany's enrichment lies in its own
behaviour and the confiscation of the assets in 1945 is a mere fact in this re
spect, the qualification ofwhich as legal or not does not matter.
6.48 Had Article 5 of Chapter Six of the Settlement Convention (Annex 16) been
applied, there wouid have been no room for a claîm under the principle of un
just enrichment Liechtenstein and îts natîonals would have been compensated
for their losses. They couid have invoked no impoverishment- while the whole
operation would have been financially neutra! for Germany: it would have paid
part of its debt to Czecboslovakia through the Liechtenstein property which
would have, then, been compensated by it. 173
6.49 The problem precise!y is that Germany bas included the Liechtenstein property
into the reparations regime while at the same time denying its obligation to
compensate Liechtenstein and its nationals for the !osses sustained under the
pretext that Article 5 of the Settlement Convention is no longer applicable
since 1990. Therefore Germany profits from the late inclusion of the assets in
the reparations regime without accepting its liability to afford compensation to
the victims. Germany is enriched and Liechtenstein and its nationals are irre
mediably impoverished by the same pattern of acts by Germany.
This does not mean that such an operation would have been lawful in other respects. As shown
in previous Chapters, would have infringed the rights of Liechtenstein, in particular the right to
respect for its neutrality and sovereignty. - 161 -
(d) The absence of legal cause or justification
6.50 Liechtenstein bas shown in the previous Chapters of this Memorial that Ger
many's behaviour was unlawful under general international law. This has no
special relevance regarding its claim based on the principle of unjust enrich
ment: whether lawful or unlawful, Germany's behaviour is the direct source of
both its own enrichment and Liechtenstein's impoverishment.
6.51 And this behaviour is devoid of any legal basis in international law. In particu-
1ar:
(a) Germany was, at the very least, not legally bound to include Liechten
stein's assets within the reparations regime;
(b) nor was it legally bound to refuse compensation for the losses resulting
from its doing so;
(c) nor was Germany in a situation such asforce majeure, distress or astate
of necessity- whîch might apply even in absence of responsibility - of
such a nature that it had to adopt the behaviour it took;
(d) nor bas Liechtenstein consented to or acquiesced in this behaviour.
6.52 Therefore, independently of their unlawful character, the acts of Germany, by
which itbas enriched itself, have no legal cause which could justify its eruich
ment. It clearly appears as an "enrichissement sans cause" the consequences of
which must be compensated by Germany. - !62-
C. Germany's unjustified change of position to Liechtenstein's detriment
l. Equitable daims based on a detrimental and unjustified
change of position: in principle
6.53 Germany's unjustified change of position, in the years after 1990, caused det
riment to Liechtenstein which should be compensated for under international
law. This would be true, even ifit were considered that Germany did not itself
gain any advantage, tangible material or ether, from the change of position.
6.54 It is submitted that under general international law, when aState acts on a mat
ter concerning another State to the detriment of the latter, and does so in a way
which is contrary to a prier understanding or position taken by the former State
and shared with the latter, the State taking the action is responsible to compen
sate for the detriment caused, unless its change of position is otherwise justi
fied.
6.55 As a matter of principle, this conclusion may be supported by reference to con
siderations of equity and good faith in international relations. The continued
generative force of such considerations is affirmed, for example, by decisions
174
of this Court, as weil as by the following paragraphs of the Friendly Rela
tions Declaration, which elaborate on the principle that States must fulfil "in
good faith the obligations assumed by them in accordance with the present
175
Charter":
'" See, e.g., Nuclear Tests (Australia v France), 20 December 1974, J.CJ. Reports 1974, pp. 253 et
seq., p. 268, para 46:ne of the basic principles governing the creation and performance of le
gal obligations, whatever their source, is the principle of good faith. Trust and confidence are in
herent in international co-operation, in particular in an age when this co-operation in many fields
is becoming increasinglyssential.".
'" Charter of the United 1\ations, Article 2 (2). - !63-
"Every State has the duty to fulfill in good faith its obligations un
der the general/y recognized princip/es and rules of international
law.
Every State bas the duty to fulfill in good faith its obligations under
international agreements valid under the g176ral/y recognized prin
cip/es and ru/es ofintemationallaw."
6.56 As a matter of authority, this principle underlies and explains a range of deci
sions of arbitral tribunals given in cases which did not involve a specifie obli
gation of conduct imposed by a treaty or ether rule of international law. A
number of illustrations may be given.
6.57 In his treatment of the range of decisions and state practice grouped under and
supportive of the general principle of good faith, Bin Cheng states that:
"The protection of good faith extends equally to the confidence and
reliance that can reasonably be placed not only in agreements but
also in communications or ether conclusive acts from another State.
If State A bas knowingly led State B to believe that it will pursue a
certain policy, and State B acts upon this belief, as soon as State A
decides to change its policy - although it is at perfect liberty to do
so - it is under a duty to inforrn State B of this proposed change.
Failure to do so, when it knows or should have known that State B
would continue to act upon this belief, gives rise to a duty to in
demnify State B for any damage it may încur. What the principle of
General Assembly Resolution 2625 (XXV), 24 October 1970, para. l, Principle 7 (emphasis
'" added). For further material on the general principlegood faith in international law, see Sir R.
Jermings and Sir A. Watts, (eds.) Oppenheim's International Law, Vol. l, 9thed., Longman,
London, 1992, p. 38; M. Shaw, International Law, 4thed., Cambrige University Press, Cam
bridge, 1997, pp. 81, 82; E. Zoller, La bonne foi en droit international public, A. Pedone, Paris,
1977; H. Thirlway, "The Law and Procedure of the International Court of Justice", 60 British
Yearbook of International Law 1989, pp. 1 et seq., pp. 7 et seq.; and G. Fitzmaurice, The Law
and Procedure of the International Court of Justice, Grotius, Cambridge, 1986, Vol. I, p. 183
and Vol. Il, p. 609. For references to equitable principlespart of international law, see Indi
vidual Opinion by M.O. Hudson, Diversion of Waterfrom the Meuse, 28 June 1937, PCIJ Series
AIB No. 70, p. 73, p. 77; North Sea Continental Shelf cases (Germany/Denmark, Ger
many/Netherlands), 20 February 1969, l.C.J. Reports, pp. 3 et seq., p. 53; M. Shaw, Interna
tional Law, 4thed., Cambrige University Press, Cambridge,1997, pp. 82-86, especially No. 121;
A.V. Lowe, "The Role of Equity in International Lv:/'12 Australian Yearbook of International
Law 1992, p. 54. - 164-
good faith protects is the confidence that State B may reasonably
place in State A.'tl7
6.58 The author gives as an example the Blockade of Portendic Case. Claims of
British Subjects against France (1843). This controversy was resolved by an
award of the King ofPrussia given at Berlin on 30 November 1843 in faveur of
the clairnants.178The French Minister of War and Marine bad informed the
British Ambassador, sorne ten months prior to the closure of the port, that it
would not be closed, and British merchants relied on that assurance to their det
riment. The British argument was to the following effect:
"The Minister of Marine may not be able to engage his Govem
ment as to what it will do, but he may be perfectly able to say what
the Government, in the department over which he presides, is not
going to do. There îs not (precise!y speaking) an engagement in this
case, but there is a confidential communication, which communica
tion, in ali good faith, is be believed, until othetwise explained or
contradicted ... [W]here a Minister of the French Govemment bas
made an official communication, relative to his own department,
the Govemment of Great Britain is justified by ali the rights and
constant usage subsisting in the intercourse between civilised na
tions, to give trust and confidence to such declaration; and that if
the French Government should think fit, aftetwards, to act contrary
to the assurances of its own official organ, that then, in common
justice, the British Government have a fair right to expect the earli
est communication of such intention."
6.59 The King ofPrussia as Arbitrator in substance agreed. He held:
"... [A}yant... à nous prononcer, comme Arbitre, sur la question de
savoir, si par suite des mesures et des circonstances qui ont précé
dé,accompagné, ou suivi l'établissementet la notification du blo
cus de la côte de Portendic en 1834 et 1835, un préjudiceréela été
induement apporté à tels ou tels sujets de Sa MajestéBritannique,
exerçant sur la dite côte un trafic régulieret légitime,et si la France
m
Bin Cheng, General Princip/es of Law as Applied by International Courts and Tribunats,
Grotius, Cambridge, 1987, p. 137.
34 British and Foreign State Papers 1377. The facts appear from the pleadings and ether docu
ments published in the same series, Vol. 23,; Vol. 33 p. 1064. - 165-
est équitablement tenue de payer à telle ou telle classe des dits ré
clamants des indemnités à raison de ce préjudice;
Nous sommes d'avis,
Que la France devra indemniser les réclamants des dommages et
préjudices auxquels ils n'auraient pas étéexposés si le dit Gouver
nement, en envoyant au Gouverneur du Sénégall'ordre d'établirle
blocus, avait simultanément notifiécette mesure au Gouvernement
179
Anglais ... ".
The equitable character of this finding and its basis in a general princip le of
good faith appear bath from the award and the pleadings of the successful
claimant. It should be stressed that in that case the Arbitrator proceeded on the
basis that France bad the right to close the port by way of the blockade, so
there was no question of any breach of a rule of international law in doing so.
Nonetheless France was responsible to nationals of a third State who bad relied
on an assurance given by a French official to that State as to its own future
conduct. This is very similar to estoppel in the general sense.
6.60 A second example is provided by the decision of the King of Sweden and
Norway in the Samoan Claims arbitration (1902). The daims concerned certain
German and other nationals injured by military action taken unilaterally by
Britain and the United States, contrary to the prior understanding of the three
goverrunents that on!y collective action would be taken. The Arbitrator upheld
the claim, saying, inter alia:
"VIhereas, furthermore, by proclamation issued on the 4thof Janu
ary, 1899, the consular representatives of the treaty powers in Sa
moa, owing to the then disturbed state of affairs and to the urgent
necessity to establish a strong provisional govemment, recognized
the Mataafa party ... to be the provisional govemment of Samoa
pending instructions from the three treaty powers, and thus those
powers were bound upon principles of international good faith to
34 British and Foreign State Papep.1378. - 166-
maintain the situation thereby created until by common accord they
bad otherwise decided; and
Whereas, that being so, the military action in question undertaken
by the British and American military authorities before the arrivai
of the instructions mentioned in the proclamation, and tending to
overthrow the provisional government thereby established, was
contrary to the aforesaid obligation and can not be justified on the
plea neither of the invalidity ab initia of the said provisional gov
ernment, nor of its establishment under a species of force ma-
Jeure ...u180
6.61 In both these cases the action taken was not unlawful perse; and the situation
in which reliance occurred was temporary in character. However situations
may occur where the neighbouring State has irrevocably relied on the situation,
i.e. where no adjustment is possible which would enable it to avoid detriment
arising. In such a case, which is closely akin to that of estoppel, the State con
cemed may not be permitted to change the common policy, even in the absence
of a treaty commitment.
6.62 Moreover the equitable character of such a requirement and its close relation
ship to the underlying principle of good faith is reinforced when the conduct in
question contradicts the evident and general legal position of the claimant
State. In such a case there is independent legal support for the position taken by
that State, with which the respondent State bas agreed and to which it bas con
formed its own position. When this occurs the respondent State should not be
allowed to change its position to the detriment of the claimant State or its na
tionals, or at !east should be required to indemnify the latter as a condition of
doing so.
"" Claims on Account of Military Operations conducted in Samoa in 1899, Preliminary Decision of
14 October 1902, Foreign Relations of the United States, 1902, pp. 444 et seq., p. 446. - 167-
2. The principle applied to the present case
6.63 In the present case this principle leads to the conclusion of Gennany's liability
to compensate Liechtenstein for the loss suffered arising from its own urljusti
fied change in its position with respect to the assets seized under the "BeneS
Decrees". In fact, Gennany and Liechtenstein had previously taken the same
position concerning those assets (a); in consequence of which Germany was
not called upon to compensate vîctims of those decrees, including those of
Liechtenstein nationality (b); but, havîng procured or accepted the termination
of any express obligation as a result of the 1990 Exchange of Notes, Germany
subsequent! y changed its position with respect to the Liechtenstein assets with
out any justification (c), thereby causing detriment to Liechtenstein and its na
tionals (d).
6.64 These facts and circumstances have already been reviewed in Part One of this
Memorial, and are recited in the context of the unjust enrichment daim earlier
in this Chapter. They may however once again be briefly recalled.
(a) The initial position of German y and Liechtenstein concerning
property seized under the "BeneS Decrees"
6.65 The initial position ofGermany and Liechtenstein in the years before 1990 was
that the property taken under the "BeneS Decrees" was not part of the repara
tions regime and would not be included in any of the provisions concerning
that regime; this position applied afortiori to Liechtenstein property having re
gard to the non-German character ofthat property and to the strict neutrality of
Liechtenstein during World War II.l8l Liechtenstein had no need to take any
different position.
'"' Seeaboveparas. 1.1 to 1.9. - 168-
(b) Germany's consequent refusai to compensate victims of the
"BeneS Decrees" in the context of the reparations regime
6.66 In consequence of this common position, Germany consistently took the view,
wîth which Liechtenstein agreed, that the Liechtenstein property was not part
of the reparations regime, that Germany would not count it as such, and that in
consequence it was under no obligation to compensate Liechtenstein or its na
tionals for the loss ofthat property.
(c) Germany's unwarranted change of position after 1990
6.67 In 1990 Germany's express obligation to compensate those whose property was
taken as German property under the reparations regime was terminated. Liech
tenstein's legal position in respect of that change in the system of the Repara
tions Convention was of course unaffected, since it was so far as Liechtenstein
was concerned res inter alios acta. But it was legitimate to infer from the
agreements and actions of this period that the established approach to German
property and the reparations regime would be maintained. For example the de
letion of the reparations obligation was not intended to deprive any persan of a
right to compensation but was a reflection of Gennany's view that the obliga
tion to compensate bad been fully perfonned. 182But this tumed out not to be
the case.
6.68 In the period after 1995 Gennany progressively took the position that the
Liechtenstein property was covered by the reparations regime as German prop
erty, with the consequence, inter alia, that Liechtenstein's claim to such prop
erty, if in Germany or subject to the jurisdiction of the German courts, would
183
be denied. This was a clear change of position on the part ofGermany.
See above para. 3.54.
'" See above paras. 3.15 et seq. - 169-
6.69 This position was referred to in an aide-mémoireof 4 October 1995 by Liech
tenstein to Germany (Annex 35), which recited the facts and their conse
quences in the following terms:
"1945 wurde das VermOgen aller liechtensteinischer Staatsbürger,
darunter auch umfangreicher Besitz des seinerzeit regierenden
Fürsten von Liechtenstein, als Staatsoberhaupt, von der Regierung
der Tschechoslowakei unter Ministerpriisident Benes entschiidi
gungslos konfisziert. Zur Begründung berief sich die tschechoslo
wakische Regierung darauf, dass alle liechtensteinischen Staats
bürger ais "Deutsche" im Sinne des Dekrets Nr. 12 vom 21. Juni
1945 anzusehen seien.
Gegen diese Konfirmationen wurde sowohl auf diplomatischem ais
auch rechtlichem Wege von der seinerzeitigen Regierung Liechten
steins wie auch dem Fürsten von Liechtenstein vergeblich demon
strier!. Ansiitze zu einer Regelung dieser das Verhiiltnis zwischen
Liechtenstein und der seinerzeitigen Tschechoslowakei belastenden
Fragen wurden durch die Machtergreifung durch die kommunisti
sche Partei zunichte gemacht.
Nach der Rückkehr der demokratisch gewiihlten Regierung in der
Tschechoslowakei wurden die liechtensteinischen Ansprüche auf
Rückgabe - oder zumindest Entschiidigung - durch die liechtenstei
nische Regierung erneuert. In grundsiitzlicher Anerkennung des
durch das kommunistische Regime verursachten Unrechts, erfolg
ten Restitutionen einzig von Konfiskationen und Enteignungen nach
1948. Alle Enteignungsakte auf der Grundlage der sog. Priisiden
ten-Dekrete von Ministerpriisident Benes wurden nicht in Frage
gestellt.
Anliisslich einer Ausstellung über niederliindische Malerei in dem
KOlner Walraff-Richartz-Museum muj3te der regierende Fürst von
Liechtenstein, Hans Adam II., feststellen, dass ein seit dem Jahre
1945 verschollen geglaubtes, in WirklichlŒitjedoch von der tsche
choslowakischen Regierung aufgrund des Priisidenten-Dekretes
Nr. 12 konfisziertes Bild aus dem fürstlichen Eigentum ausgestellt
wurde. Durch seine deutschen Rechtsvertreter erwirkte er eine auf
Sequestration gerichtet Sicherungsverfiigung gegen die Stad! KO!n
ais Besitzer des Bildes und Rechtstriiger des Walraff-Richartz
Museums. In dem sich anschliefienden Hauptsacheverfahren, ge
rich/et gegen die Stadt KO!nais Besitzer, trat die Tschechische Re
publik als Streithelfer auf Seiten der Stadt KO!n dem Prozej3 bei, - 170-
weigerte sich jedoch, diesen anstelle der Stad! KO!n zu überneh
men. Diese bleibt vielmehr nach wie vor Hauptpartei dieses
Rechtsstreits.
lm Verlaufe dieses Prozesses wurde von der Tschechischen Repu
blik die Behauptung wiederholt, dass Liechtenstein einen Teil der
deutschen Nation bi/de und alle liechtensteinischen Staatsbürger,
also auch das Staatsoberhaupt von dem Fürstentum Liechtenstein,
als Deutsche anzusehen seien.
Da die Stad! KOln dieser Rechtsaujfassung ihrer eigenen Streithel
ferin in dem Prozej3nicht entgegengetreten ist, wird ihr diese nach
der deutschen ZivilprozejJordnung zugerechnet. Da auf der ande
ren Seite die Stadt KOln als Offentlich-rechtliche KOrperschaft ei
nen Teil der Bundesrepublik Deutschland darstellt und der
Rechtsaufsicht des Landes Nordrhein- Westfalen unterliegt, stellen
sich folgende Fragen:
1. Entspricht die von der Stadt KO!n mittelbar eingenommene
Haltung auch der Auffassung der Bundesrepublik Deutschland?
2. Sollte die Haltung der Stadt KO!n nicht der Auffassung der
Regierung der Bundesrepublik Deutschland entsprechen, welche
MOglichkeiten gibt es, auf die Stadt KOln einzuwirken, von derarti
gen rechtsverbindlichen Erkliirungen mit weitreichenden Konse
quenzen auch auf das Verhiiltnis zwischen dem Fürstentum Liech
tenstein und der Bundesrepublik Deutschland im Hinblick auf die
Reparationsfrage abzusehen, um ein einheitliches Bild in der au
fienpolitischen Haltung der Bundesrepublik Deutschland gegen
über dem Fürstentum Liechtenstein wiederherzustellen?"
Translation:
"In 1945, the property of ali Liechtenstein citizens, including ex
tensive property owned by the then Reigning Prince of Liechten
stein as Head of State, was confiscated without compensation by
the Government of Czechoslovakia under President BeneS. Stating
the reasons for their measures, the Czechoslovak Government in
voked the provision that ali Liechtenstein citizens bad to be re
garded as 'Gerrnans'within the meaning of the Decree No. 12 of21
June 1945.
At the time, the then Government of Liechtenstein and the Prince
of Liechtenstein demonstrated against such confirmations both by
diplomatie and legal means, but without success. Initial stagesof an
attempt to solve this problem which weighed on the relationship - 171 -
between Liechtenstein and the then State of Czechoslovakia were
destroyed when the Communist Party seized power.
Upon the retum of a democratically elected Govemment in
Czechoslovakia, the Liechtenstein Government renewed Liechten
stein claims for restitution - or at Jeast compensation. In principle
acknowledgment of the injustices suffered under the communist re
gime, restitutions were only effected for confiscations and expro
priations carried out after 1948. Ail expropriation measures carried
out on the basis of the so-called Presidential Decrees of President
BeneS were not called into question.
On the occasion of an exhibition about Dutch painting in the Wal
raff-Richartz Museum in Cologne, the Reigning Prince of Liech
tenstein, Hans-Adam II, was surprised to find that a painting shown
there bad belonged to the princel y property and was presumed to be
lost since 1945, while it bad in fact been confiscated by the
Czechoslovakian Government on the basis of the Presidential De
cree N. 12. By the agency of his German legal representatives, the
Prince obtained an order against the Municipality of Cologne - pos
sessing the painting at the time in its capacity as the legal entity re
sponsible for the Walraff-Richartz-Museum - to have the painting
kept in the custody of a sequestrator. In the proceedings on the
merits of the case, in which the Municipality of Cologne as pesses
sor of the painting acted as defendant, the Czech Republic inter
vened as a third party on the side of the Municipality of Cologne,
but refused to take the place of the Municipality of Cologne in the
proceedings. Hence, the latter has remained principal party of this
lawsuit.
In the course of the proceedings, the Czech Government repeated
its assertion that Liechtenstein was part of the German nation and
that ali Liechtenstein citizens, i.e. inclusive the Head of State of
the Principality of Liechtenstein, have to be regarded as Germans.
During the proceedings, the Municipality of Cologne did not
counter this legal opinion presented by the third party intervening
on the side of Cologne, and bence such opinion is attributable to
the Municipality of Cologne in accordance with the German Code
of Civil Procedure. Considering that, on the other side, the Munici
pality of Cologne as a public corporation is part of the Federal Re
public of Germany and - as far as questions regarding the legality
of administrative activities are concemed - under the authority of
the Land North-Rhine Westphalia, the following questions arise: - 172-
1. Does the position indirectly taken by the Municipality of Co
logne correspond to the position taken by the Federal Republic of
German y?
2. In the event that the position of the Municipality of Cologne
does not correspond to the point of view supported by the Govem
ment of the Federal Republic of German y, what possible means are
available to influence the Municipality of Cologne to the effect that
the latter will refrain from making such declarations of a legally
binding nature which are bound to have far-reaching consequences
for the relationshîp between the Principality of Liechtenstein and
the Federal Republic of German y also with respect to the reparation
issue, and in arder to restore the Federal Republic of Germany's
consistent attitude vis-à-vis the Principality of Liechtenstein with
regard to foreign affairs?"
6.70 German y did not forrnally reply to this note, but its subsequent conduct, as evi
184
denced by the position taken before the German courts, before the European
Court of Human Rîghts, 185 and in subsequent diplomatie exchanges 186evi
dences its refusai "to restore the Federal Republic of Gerrnany's consistent atti~
tude vis-à-vis the Principality of Liechtenstein with regard to foreign affairs".
6.71 It is not for Liechtenstein to seek to justify Germany's conduct in this regard;
German y can plead such justifications as it wishes to propose in the course of
the pleadings in the present case. But in any event, no justification or warrant
for Germany's change of position appears. As noted already, Germany was not
in a situation such as force majeure, distress or a state of necessity - which
might apply even in absence of responsibility - of such a nature that it had to
adopt the behaviour it took; nor bas Liechtenstein consented to or acquiesced in
this behaviour.
See above paras. 3.31 et seq.
See above paras. 3.37 et seq.
,..
See above paras. 3.42 et seq. - 173-
(d) The detriment to Liechtenstein arising from
Germany's change of position
6.72 Liechtenstein and îts nationals have suffered detriment as a result ofGermany's
unjustified change of position, and have done so in a number of ways. These
need only to be summarized here.
6.73 In the first place, there was the loss of the Pieter-van-Laer painting itself, to
which on the basis of Germany's own prier position Liechtenstein had, as a
minimum, a legitimate claim. But the detriment does not stop with the immedi
ate abject of the litigation before the German courts, and the present claim
would not have been brought if that was ail that was at stake. Over and above
the immediate issues associated with the return of the painting to the Czech
Republic are the following elements: the opening up of a channel for the dispo
sition of Liechtenstein movable property seized under the "BeneSDecrees"; the
reinforcement of the Czech position with respect to the dispute, and the conse
quent harm to Liechtenstein nationals in terms of the further pursuit of their
claims, as weil as the direct moral and other injury suffered by reason of the
classificationof their property as German and its inclusion, wîthout any man
uer of justification, in the war reparations regime. Furthermore the delay in the
German change of position deprived Liechtenstein's citizens from the opportu
nity of seeking and obtaining compensation from Gennany, whether in the
courts or otherwise. - 174-
D. Conclusion
6.74 For these reasons, in addition to those presented in the preceding Chapters of
this Memorial, it is submitted that the Respondent State is responsible to Liech
tenstein, on its own behalf and on behalf of its nationals, in respect of the in
jury suffered by Germany's unjustified enrichment at their expense, and by vir
tue of their detrimental and fruitless reliance on Germany's good faith in main
taining the reparations regime in a form which did not implicate Liechtenstein
or its nationals. - 175-
CHAPTER7
LEGAL CONSEQUENCES OF GERMANY'S CONDUCT
TOW ARDS LIECHTENSTEIN - 176-
A. Germany's obligations of cessation and reparation
(including compensation)
7.1 As demonstrated in the preceding Chapters, by including the Liechtenstein
property within the scope of the post-war reparations regime Germany
breached its international obligations towards Liechtenstein. As reflected in Ar
ticle 12 of the International Law Commission's Articles on the Responsibility
of States for Intemationally Wrongful Acts, annexed to General Assembly
resolution 56/83 of 12 December 2001 (the ILC Articles), this conduct gives
rise to the international responsibility of Gennany. Article 12 provides:
"There is a breach of an international obligation by a State when an
act of that State is not in conformity with what is required of it by
that obligation, regardless of its origin or character."
There is no doubt that any breach of an international obligation incumbent
upon a State entails its international responsibility, with ali its remediai con-
sequences.
7.2 This legal principle is firmly rooted in international law. It was already ex
pressed by the Permanent Court of International Justice:
"This act being attributable to the State and described as contrary to
the treaty right of another State, international responsib187ty would
be established immediate}y as between the two States."
In the Rainbow Warrior case, the Arbitral Tribtmal emphasised that "any viola
tion by aState of any obligation, of whatever origin, gives rise to State respon
sibility" .8
Phosphates in Morocco (Preliminary Objections), 14 June 1938, PCIJ, Series AIB, No. 74, pp. 7
et seq.,28.
'" Arbitral Tribunal Award, 30 April 1990, Rainbow Warrior (New Zealand/France), Decision of
30 Aprill990, UNRIAA, Vol. XX, pp. 217 et seq., p. 251. - 177-
7.3 Article 1of the ILC Articles reflects this principle:
"Article 1
Responsibility of a State for its internationally wrongful acts
Every intemationally wrongful act of a State entails the interna
tional responsibility ofthat State."
This principle is confirmed in Article 28:
"Article 28
Legal consequences of an internationally wrongful act
The international responsibility of a State which is entailed by an
internationally \Vfongful act in accordance with the provisions of
Part One involves legal consequences as set out in this Part."
The commentary refers to decisions of this Court, of its predecessor and of
arbitral tribunats as weil as the relevant doctrine which emphases this duty
189
and which establish the universai applicability of this principle.
7.4 Germany explicitly recognized this general principle in its pleadings in the
LaGrand case before this Court:
"Germany submits that the general rules of State responsibility are
applicable to ali kinds of intemationally wrongful acts unless ex
pressly stipulated otherwise. This derives from the very nature of
the rules on State responsibility as 'secondary rules' whîch are to be
applied whenever 'primary' obligations have not been observed ...
To state otherwise would mean that it would be necessary for each
and every treaty or convention to reiterate the rules on State re
sponsibility. 190
'" ILC Report 2001, UN General Assembly, Official Records, A/56/10, pp. 63-65, es3548.s.
"" La Grand Case (Germany v. United States of America), Memorial of the Federal Republic of
Germany, Vol. I, 16 September 1999, para. 6.06. - !78-
7.5 The legal content of State responsibility is laid out in Articles 28 and following
of the ILC Articles. A responsible State remains obliged to comply with the
rule breached, as the breach does not tenninate the obligation. This effect is re
flected in Article 29 of the ILC Articles, entitled "Continued duty of perform-
ance":
"The legal consequences of an internationally wrongful act under
this Part do not affect the continued duty of the responsible State to
perform the obligation breached."
As a result of this obligation Germany continues to be bound to respect the
neutrality of Liechtenstein, which the latter faithfully observed during World
War II, and German y bas to desist from any acts which impairs this status.
B. The remediai situation
7.6 Although the legal consequences arising from an internationally wrongful act
are determined by international law and arise irrespective of the will of the in
jured State, nonetheless it is in the first instance a matter for that State to indi
cate what forms of remedy it seeks in respect of any particular breach. This is
reflected in Article 43 of the ILC Articles, pursuant to which an injured State
1may specify in particular ... (b) what form reparation should take in accor
dance with the provisions of Part Two".
7.7 In the consultations that took place between Liechtenstein and Germany, which
are described in Chapter 3 above, Liechtenstein sought in the first instance an
acknowledgement by Germany of its breach of the relevant obligations and as
surances of respect in the future for Liechtenstein's sovereignty, and for the
property rights and claims of its citizens. Germany not only refused to make
such an acknowledgement but in the course of the discussions made it clear
that its attitude was not limited to the Pieter-van-Laer painting, the subject of - 179-
the proceedings before the German courts; it applied to the Liechtenstein prop
erty as a whole and in general. 191
7.8 Liechtenstein further claimed that this conduct of Germany, whether or not it
was as such a breach of an international obligation of Gennany to Liechten
stein, entailed an obligation on the part of Germany to compensate for loss suf
fered by Liechtenstein's nationals. \Vhether or not Gennany was entitled to
treat the Liechtenstein property as falling within the scope of the reparations
regime, it was in any event required to cornpensate the owners of the property
in question, either directly or by way of action by Liechtenstein on their behalf.
As explained in Chapter 6, Gennany's unjust enrichment at Liechtenstein's ex
pense, and its unjustified change of position in the matter of the scope of the
reparations regime, also entail an obligation to compensate persons affected
thereby, independently of any responsibility as weil as for its unjust enrichment
and/or its change of position to Liechtenstein's detriment. But in the consulta
tions referred to in the previous paragraph and in other diplomatie exchanges
(as set out in Chapter 3), Germany also refused to make compensation conse
quential upon its classification of the Liechtenstein property as falling within
the scope of the reparations regime. The remedies sought by Liechtenstein thus
encompass remedies for all intemationally wrongful acts of German y, includ
ing its failure to compensate under the relevant primary obligations.
1. Declaratory relief
7.9 Liechtenstein seeks in particular to ensure respect for its sovereignty and neu
trality, and for their legal consequences under the reparations regime. Liechten
stein having maintained strict neutrality during World War II, its property is in
no case to be classified as property seized on account of reparations, nor is the
value of that property to be accounted for in terrns of any final settlement of
"' See above paras. 3.37 et seq. and 3.42 et seq. - 180-
reparations claims arising from the war and its a:ftermath. In any event, any
losses suffered by the owners of the Liechtenstein property are to be made
good by compensation.
7.10 In these circumstances, Liechtenstein seeks, in the first instance, a declaration
from the Court of the resulting legal situation in terms of Germany's responsi
bility.
2. Cessation and assurances and guarantees of non-repetition
7.11 Secondly, Liechtenstein seeks to ensure that Germany ceases for the future to
consider the Liechtenstein property as having been "seized for the purposes of
reparation or restitution, or as a result of the state ofwar", i.e. as covered by the
reparations regime. In the LaGrand case Germany itself sought guarantees of
non-repetition in order to prevent further violations of its rights and those of its
192 193
nationals in the future. Quoting literature as weil as judicial practice, it de
clared that this duty was "in full accordance with international practice and
doctrine". In its judgment, this Court held:
"that the commitment expressed by the United States to ensure im
plementation of the specifie measures adopted in performance of its
obligations under Article 36, paragraph 1 (b), [of the Vienna Con-
"En général,dans tous les cas de préjudicesde caractère moral et politique, l'État lésé,entre au
tres formes de satisfaction demande des assurances de sécuritépour l'avenir, ce qui signifie que
l'État intéressés'acquittera avec plus deligence ou plus d'efficacitéde son devoir de protec
tion.", F. Przetacznik, "La responsabilitéinternationale de à'raison des préjudicesde carac
tère moral et politique causésun autre État", 78 Revue généralede Droit international public
1974, pp. 919 et seq., pp. 966-967, and the examples cited therein. See also, inter aliaR.Sir
Jennings and Sir A. Watts, (eds.) Oppenheim's International Law, Vol. l, 9th ed., Longman,
London, 1992, p. 532; I. Brownlie, Princip/es of Public International Law, 5th ed., Clarendon,
Oxford, 1998, p. 463 (counting guarantees among measures of satisfaction).
The International Tribunal for the Law of the Sea explained that "(r)eparation may be in the form
'"
of 'restitution in kind, compensation, satisfaction and assurances and guarantees of non
repetition either singly or combinatîon' "; MIV "Saiga" (No. 2) Case (Saint Vincent and the
Grenadines v. Guinea), Judgment of 1 July 1999, 38 ILM 1999, pp. 1323 et seq., p. 1357, para.
171. - 181 -
vention on Consular Relations of 1963] must be regarded as meet 194
ing Germany's request for a general assurance of non-repetition. "
However, it continued that:
"...if the United States, notwithstanding its commitment referred to
... should fail in its obligation of consular notification to the detri
ment of German nationals, an apology would not suffice in cases
where the individuals concemed have been subjected to prolonged
detention or convicted and sentenced to severe penalties. In the
case of such a conviction and sentence, it would be incumbent upon
the United States to allow the review and reconsideration of the
conviction and sentence by taking account of the violation of the
195
rights set forth in the Convention."
7.12 Article 30 of the ILC Articles, entitled "Cessation and non-repetition", reflects
this duty. It provides:
"The State responsible for the intemationally wrongful act is under
an obligation:
a) To cease that act, ifit is continuing;
b) To offer appropriate assurances and guarantees of non
repetition, if circumstances so require."
As a consequence of the breach of respect of the sovereignty and neutrality of
Liechtenstein and the rights of its nationals, Germany is under the duty to offer
these measures. The circumstances of the case require such assurances and
guarantees in view of the particular legal nature of the acts by which the new
German position has been created. Without such a guarantee, Liechtenstein
would have no certainty that a German court in future will not take again a de
cision in disrespect of the neutrality of Liechtenstein during World War Il.
Germany is bound to ensure that in future no legal ground will exist which
could enable a judgment equivalent to that relating to the property of its na
tionals.
La Grand Case (Germany v. United States of America), 27 June 2001, para. 124.
"'
'" Ibid, para. 125. - !82-
3. Reparation and, in particular, compensation
7.13 In addition to the aforementioned obligations, Germany is obliged to provide
full reparation for the wrong ithas committed towards Liechtenstein, whether
by its inclusion of the Liechtenstein property within the scope of the repara
tions regime or by its failure to compensate the owners of that property as a
consequence of such inclusion.
7.14 As the Court most recently affirrned in its judgment in the Arrest Warrant
case,196it is a general principle of law that "reparation must, as far as possible,
wipe out ali the consequences of the illegal act and re-establish the situation
which would, in ali probability, have existed if that act bad not been commit
ted".197 Depending on the type and extent of damage, the relevant prirnary
norm violated as well as the circurnstances of the case, reparation takes the
form of restitution, compensation and satisfaction. 198
7.15 Article 35, entitled "Restitution", provides as follows:
"AState responsîble for an internationally wrongful act is under an
obligation to rnake restitution, that is, to re-establish the situation
which existed before the wrongful act was committed, provided
and to the extent that restitution:
(a) Is not materially impossible;
(b) Does not involve a burden out of ali proportion to the benefit
deriving from restitution instead of compensation."
Arrest Warrant of 11 Apri/2000 (Democratie Republic of the Congo v. Belgium), 14 February
2002, para. 76.
Factory at Chorz6w, (Merits), 13 September 1928, PCIJ, Ser. A, No. 17, 1928, p. 47.
See Article 34 of the Articles on Responsibility of States for Internationa!ly WronILCl Acts,
'" Report, 2001, UN General Assembly, Official Records, N56/IO, p. 52. - 183-
In cases where the wrongful act consists of a domestic judicial decision, resti
199
tution requires the abrogation ofthat decision or judgment. From the point of
view of international law, the fact that domestic law may not readily allow for
such a measure, is immaterial for the responsible State's obligation to restitu
tion because the provisions of the interna! law of the author State may not serve
00
as justification for failure to comply with an international obligation? Neither
may the wrongdoing State in such cases rely on material impossibility of resti
tution; since legal acts, including final judicial decisions, can in principle al
ways be rescinded. Even though a change in the domestic legal arder may give
rise to difficulties or may even require an amendment of the responsible State's
constitution, such abrogation can never be materially impossible. 201
7.16 As established in this Memorial, the conduct of German y violates Liechten
stein's rights and its status as a neutral State during World War II, as weil as the
rights of its nationals. Germany is obliged to re-establish the situation that ex
isted prior to this violation. In the present case, German y is therefore obliged to
provide restitution, as set out in Article 35 of the ILC Articles.
7.17 Insofar as restitution does not make good the damage caused by the wrongful
act, the State responsible for this act bas to provide compensation for the mate
rial damage suffered by the injured State. 202 Compensation covers any finan
cially assessable damage incurred by the State directly or indirectly through its
Cf. Arbitral Tribunal Award, the Martini case (Italy v. Venezuela), 3 May 1930, UNRIAA, Vol.
Il, pp. 973 et seq., 1002.
See Article 32 of the Articles on Responsibility of States for Intemationally Wrongful Acts, JLC
Report, 2001, UN General Assembly, Official Records, A/56/10, p. 51.
W. Riphagen, "State Responsibility. Sixth report on the content, fonns and degrees of interna
"'
tional responsibility; andImplementation" (mise en oeuvre) of international responsibility and
the settlementof disputes (part 3 of the draft articles)", Yearbook of the International Law Co
mission 1985, Vol. II, part 1, pp. 3 et seq., p. 9, sub-para. (9); G. Arangio-Ruiz, "Preliminary re
port on State responsibility", Yearbook of the International Law Comiuion 1988, Vol. II p1,t
pp. 6 et seq., p. 33, para. 98; J. Crawford, "Third report on State responsibility. Addendum",
A/Œ.4/507/Add.1, 15 June 2000, pp. 4-18, paras. 124-146.
"' See Article 36 of the Articles on Responsibility of States for Internationally Wrongful Acts, ILC
Report, 2001, UN General Assembly, Official Records, A/56/10, p. 52. - 184-
nationals. In the present case, Liechtenstein bas incurred financially assessable
damage by reason of the injury and detriment suffered by the owners of the
Liechtenstein property, and Germany is obliged to compensate for this.
7.18 Alternatively, as explained in paragraph 7.8 above, Germany is under a pri
mary obligation to provide compensation consequential upon the inclusion of
the Liechtenstein property within the scope of the reparations regime. lts fait
ure to provide such compensation is thus in itself an intematîonally wrongful
act.
7.19 To the extent that neither restitution nor compensation can wipe out ali the in
jurions consequences of the intemationally wrongful acts referred to above, the
responsible State has to provide satisfaction for the non-material damage suf
fered by the injured State. Typical cases of non-material damage involve viola
tions of State sovereignty, i.e., of respect for the identity and personality of the
203
State. Included in this category is a failure of respect for a State's neutralîty
and for the rights of its nationals. Appropriate forms of satisfaction would in
204
elude a declaration by the Court of the wrongfulness and an apology by the
205
respondent State. In the present case, by its failure to respect Liechtenstein's
status as a sovereign and neutral State, Germany violated Liechtenstein's rights
and caused non-material damage to Liechtenstein for which it bas to provide
satisfaction in the form of an apology.
'" The Corfu Channel Case (Merits), 9 Aprill949, J.CJ. Reports 1949, pp. 4 et seq., p. 35.
The MIV "Saiga" (No. 2) Case (Saint Vincent and the Grenadines v. Guinea), 1 July 1999, 38
ILM 1999, pp. 1323 et seq., p. 1358, para. 176; Rainbow Warrior (New Zealand/France), Deci
sionof30 Aprill990, UNRIAA, Vol. XX, pp. 217 et seq., pp. 272-273.
"' Arbitral Tribunal Award, 5 January 1935, The'Tm Atone" case (Canada/U.S.A), UNRIAA,
Vol. III, pp.1609 et seq., p. 1618; Rainbow Warrior (New Zealand/France), 6 July 1986,
UNRIAA, Vol. XIX, 1986, pp. 199 et seq., p. 213. - 185 -
4. Conclusion
7.20 Accordingly, Liechtenstein requests that the Court make a declaration asto the
responsibility, in princip le, of Gennany for its failure to respect the sovereignty
and neutrality of Liechtenstein, and for its failure to compensate Liechtenstein
for lasses suffered, as set out in this Memorial. The Court should correspond~
ingly decide on the appropriate forms of cessation and reparation among those
discussed in this Chapter. In particular, it should declare that by reason of the
breaches of obligation towards Liechtenstein, German y is obliged to pay com
pensation for these breaches. Liechtenstein requests the Court, in a subsequent
phase of the proceedings, to determine and to assess the arnount of compensa
206
tion due.
See Fisheries Jurisdiction (Federal Republic of Germany v. Jceland25 July 1974, J.CJ. Re
ports 1974, pp. 175 et seq.,pp. 204-206, paras. 76-77Case Concerning United States Diplo
matieand Consular Staff in Tehran,24 May 1980, !.Cl. Reports 1980, pp. 3et seq.pp. 45 et
seq. (operative para. 6). - 187 -
1. For the reasons set out above, and reserving the right to amend these submissions
in the light of further evidence and argument, the Principality of Liechtenstein re
quests the Court to adjudge and declare that:
(a) by its conduct with respect to Liechtenstein and the Liechtenstein property,
Gerrnany has failed to respect the sovereignty and neutrality of Liechten
stein and the legal rights of Liechtenstein and îts nationals with respect to
the property;
(b) by its failure to make compensation for !osses suffered by Liechtenstein and
its nationals,Germany is in breach of the rules of international law;
(c) consequently Germany bas incurred international legal responsibility and is
bound to provide appropriate assurances and guarantees of non-repetition,
and to make appropriate reparation to Liechtenstein for the damage and
prejudice suffered.
2. Liechtenstein further requests that the amount of compensation should, in the ab~
sence of agreement between the parties, be assessed and determined by the Court
in a separate phase of the proceedings.
Dr. Alexander Goepfert
Agent of the Principality of Liechtenstein
Vaduz
28 March 2002 - 188-
LIST OF ANNEXES
Annex 1: Note of the Liechtenstein Govemment addressed to the Political Depart
ment of the Swiss Confederation in Bem on 30 August 1939
Annex 2: Statement of the Swiss Ambassador FrOlicher: Copie de réception of 1
September 1939
Annex 3: Note of the Foreign Office of the United Kingdom to the Swiss Ambas
sador in London of 1September 1939
Annex4: Note of the Italian Ministry of Foreign Affairs to the Swiss Ambassador
in Rome of 4 September 1939
Annex 5: Note of the Foreign Ministry of the French Republic to the Swiss Bru
bassy in Paris of 10 September 1939
Annex 6: Czechoslovaklan Decree No. 12 concerning the confiscation and acceler
ated allocation of agricultural property owned by Germans, Hungarians
and also by people who have committed treason and acted as enemies of
the Czech and Slovak people of21 June 1945
Annex 7: Czechoslovakian Decree No. 108 regarding the confiscation of enemy
property and the national reconstruction fund25 October 1945
Annex 8: List of the families affected by the confiscation measures of the then
Czechoslovakian govemment
Annex 9: Decision of the Administrative Court in Bratislava of 21 November 1951
(Ref. No. GZ 138/46-5) - 189-
Annex 10: Declaration regarding the Defeat of Germany and the Assumption of Su
preme Authority by the Allied Powers of 5 June 1945
Annex 11: Protocol of the Proceedings of the Crimea Conference of 11 February
1945 (Yalta Protoco1)
Annex 12: Report on the Tripartite Conference of Berlin of 2 August 1945 (Potsdam
Protocol)
Agreement on Reparation from Germany, on the Establisment of an In
Annex 13:
ter-Allied Reparation Agency and on the Restitution of Monetary Gold of
14January 1946 (Paris Agreement)
Annex 14: Allied Control Council Law No. 5 on Vesting and Marshalling of Ger
man External Assets of30 October 1945
Annex 15: Law No. 63 ofthe Council of the Allied High Commission Clarifying the
Status of German External Assets and of Other Property Taken by Way
of Reparation or Restitution of 31 August 1951
Annex 16: Convention on the Settlement of Matters Arising out of the War and the
Occupation of 26 May 1952 as amended on 23 October 1954
Annex 17 : Convention on Relations between the Three Powers and the Federal Re
public ofGermany of26 May 1952 as amended on 23 October 1954
Annex 18: Treaty on the Final Settlement with respect to Germany ("Two-Plus
Four-Treaty") of 12 September 1990 - 190-
Annex 19: Exchange of Kotes constituting an Agreement concerning the Conven
tion on Relations between the three Powers and the Federal Republic of
Germany of 26 May 1952 and the Convention on the Seulement of Mat
fers Arising out of the War and the Occupation of 26 May 1952 of 27
September and 28 September
Annex 20: Report of the Committee of the Federal Parliament for the Occupation
Statute and Other External Affairs of 16May 1952
Annex 21: Statement of the Secretary of State of the German Federal Ministry of
Finance of 22 February 1951
Annex 22: Explanatory Memorandum of the Federal Govemment of Germany to the
Settlement Convention of21 July 1952
Annex 23: Statement of the Committee for Legal Issues and Constitutional Law in
the written report on theettlement Convention of 15 November 1952
Annex 24: Treaty on Mutual Relations between the Federal Republic of Germany
and the Czechoslovak Socialist Republic of 11 December 1973
Annex 25: Statement of Defense of the Federal Republic ofGermany in proceedings
before the administrative court of Berlin, Kretschmer ./.Federal Republic
ofGermany of25 June 2001 (Ref. No. VG 1A 261.00)
Annex26: Statement of the German Governrnent concerning the Prague Treaty of
Il June 1974
Annex 27: Decision of the Federal Constitutional Court of Germany of 25 January
1977 (Ref. No.! BvR 210,221,222,248, 301/74) - 191 -
Annex 28: Decision of the Regional Court of Cologne of 10 October 1995 (Ref. No.
50 182/92)
Annex 29: Decision of the Court of Appea1of Cologne of09 Ju1y 1996 (Ref. No. 22
u 215/95)
Annex 30: Decision of the Federal Court of Justice of Gennany of 25 September
1997 (Ref. No. II ZR 213/96)
Annex 31: Interlocutory Order of the Federal Constitutional Court of Germany of26
November 1997 (Ref. No. 2 BvR 198!/97)
Annex 32: Decision of the Federal Constitutional Court of Germany of 28 January
1998 (Ref. No. 2 BvR !981197)
Annex 33: Statement of the Reigning Prince Hans Adam II of Liechtenstein, repre
sented by the Law Firm Wirtz & Kraneis, before the Regional Court of
Cologne of 11 July 1995 (Reigning Prince Hans Adam II of Liechtenstein
./. Municipality of Cologne, Ref. N50 182/92)
Annex 34: Statement of the Historical Monuments Office in Brno, represented by
the Law Finn Uhlenbruch, Bartholomé & Dell, before the Regional
Court of Cologne of 8 March 1995 (Reigning Prince Hans Adam II of
Liechtenstein.!.Municipality of Cologne, Ref. No. 5 0 182/92)
Annex35: Aide Mémoire of the Principality of Liechtenstein to the German Ambas
sador Heyken of 4 October 1995 - 192-
Annex 36: Memorial of the Agent of the Government of the Federal Republîc of
Germany submîtted to the European Court of Human Rights of 29 Oeta
ber 1999
Annex 37 : German-Czech Declaration on Mutual Relations and their Future Devel
opment of21 January 1997
Annex 38: Official Note of the Government of the Principality of Liechtenstein of 5
May 1997
Annex 39: Verbal Note of the Embassy of the Federal Republic of Gennany of 10
June 1997
Annex 40: Letter of the Chancellor of the Federal Republic of Gennany, Dr.
Helmut Kohl, of 14 January 1997
Annex 41: Aide Mémoire of the Principality of Liechtenstein to the Foreign Office
of the Federal Republic of Germanyof3 June 1998
Annex 42: List of Questions submitted by the Principality of Liechtenstein to the
Federal Govemment of Germany of July 1998
Annex 43: Letter of the Foreign Minister of Liechtenstein, Dr. Andrea Willi, to the
Gennan Foreign Minister, Josef Fischer, of9 December 1999
Annex44: Aide Mémoire of the Foreign Minister of Liechtenstein to the German
Foreign Minister of9 December 1999
Annex 45: Letterof the Foreign Minister, Josef Fischer, to the Foreign Minister of
Liechtenstein, Dr. Andrea Willi, of 20 January 2000 - 193-
Annex46: Czechoslovakian Constitutional Decree of the President of the Republic
of 2 August 1945 on the Regulation of the Czechoslovak Nationality of
Persans belonging to the German and Hungarian People
Annex47: Statement of the Federal Goverrunent in the proceedings on the second
action for a declaratory judgementof the parliamentary group of the SPD
of 14 August 1953THIS IS TO CERTIFY that this List of Annexes is complete and correct and
contains all annexes attached to the Memorial.
Dr. Alexander Goepfert
Agent for the Principalityof Liechtenstein
28 March 2002
Memorial of the Principality of Liechtenstein