Facts.

The explosion of mines in the Albanian

(P) waters resulted in the death of a British
naval personnel. It was on this basis that the
United Kingdom (D) claimed that Albania (P)
was internationally responsible for damages.
Issue. Are international obligations in time of
peace
created
through
elementary
consideration?
Held. Yes. International obligations in peace
time
are
created
through
elementary
consideration. Every state has an obligation
not to knowingly allow its territory to be used
for acts contrary to the rights of other states.
The
Corfu
(United
Kingdom
1949 I.C.J. 4 (Apr. 9)

Channel
v.

Case
Albania)

During the Greek Civil War, UK ships were of

the coast gathering intelligence. The ships
passed through the Corfu Channel, which
separated the Greek Island of Corfu from the
Albanian mainland.

In
order
to
count
as
an innocent
passage under customary international law,
the passage must not be intended to be
threatening.
Albania argued that there is no reason to use
the Corfu Channel just to get from Point A to
Point B. It isn't convenient for that. The only
possible reason to be there is to threaten
Albania.
Albania mined the channel. The UK sent
minesweepers and de-mined the channel.
The UN Security Council asked both parties to
take the dispute to the International Court of
Justice for adjudication.
The ICJ found that ships can use narrow
channels for innocent passage, even if that
meant they had to enter the 12 mile territorial
waters of a coastal country.
The ICJ found that the UK did have a right to
traverse the Channel

The Corfu Channel was narrow, and ships that

were in it were closer than 12 miles from the
Albanian coast.

However, the ICJ reminded the UK that they

could only use the Channel for innocent
passage.

Historically, the waters less than 12 miles from

a country's coast were considered to be
a territorial water and under the sovereign
control of the coastal country.

The Court wasn't ready to find that the UK was

sending ships into the Channel to threaten
Albania, but noted that there was evidence
that's what they were doing.

Albania fired on the UK ships. The UK protested

the action.

The ICJ found that since the Channel could be

used for innocent passage, Albania could not
mine it without giving notice.

UK claimed their ships

an innocent passage.

were

involved

in

Albania claimed that sending warships through

the channel was meant to be intimidating and
thus was not 'innocent'.

The Court also found that the UK couldn't

sweep
the
Channel
for
mines,
since
minesweeping was outside of the definition
of innocent passage.
This case was decided based on customary
international law, as it occurred prior to

the Convention on the Law of the Sea (1833

U.N.T.S. 3 (1982)), which would now be
controlling.
See Articles 17-21 of the Convention for the
rules of innocent passage.
See Article 39 of the Convention for the rules
of transit passage.
CASE
CONCERNING
UNITED
DIPLOMATIC
CONSULAR STAFF IN TEHRAN

STATES
AND

Judgment of 24 May 1980

In its Judgment in the case concerning United
States Diplomatic and Consular Staf in Tehran,
the Court decided (1) that Iran has violated and
is skill violating obligations owed by it to the
United States; (2) that these violations engage
Iran's responsibility; (3) that the Government of
Iran must immediately release the United
States nationals held as hostages and place
the premises of the Embassy in the hands of
the protecting power; (4) that no member of
the United States diplomatic or consular staf
may be kept in Iran to be subjected to any form
of judicial proceedings or to participate in them
as a witness; (5) that Iran is under an
obligation to make reparation for the injury
caused to the United States, and (6) that the
form and amount of such reparation, failing
agreement between the parties, shall be
settled by the Court. (The full text of the
operative paragraph is reproduced below.)
These decisions were adopted by large
majorities: (1) and (2) - 13 votes to 2; (3) and
(4) - unanimously; (5) - 12 votes to 3; (6) - 14
votes to 1 (the votes are recorded by name
below).
*
**

A separate opinion was appended to the

Judgment by Judge Lachs, who voted against
operative paragraph 5. Dissenting opinions
were appended by Judge Morozov, who voted
against paragraphs 1, 2, 5 and 6, and by Judge
Tarazi, who voted against paragraphs 1, 2 and
5.
Procedure before the Court (paras. 1-10)
In its Judgment, the Court recalls that on 29
November 1979 the United States of America
had instituted proceedings against Iran in a
case arising out of the situation at its Embassy
in Tehran and Consulates at Tabriz and Shiraz,
and the seizure and detention as hostages of
its diplomatic and consular staf in Tehran and
two more citizens of the United States. The
United States having at the same time
requested
the
indication of
provisional
measures, the Court, by a unanimous Order of
15 December 1979, indicated, pending final
judgment,
that
the
Embassy
should
immediately be given back and the hostages
released (see Press Communiqu No. 80/1).
The procedure then continued in accordance
with the Statute and Rules of Court. The United
States filed a Memorial, and on 18, 19 and 20
March 1980 the Court held a public hearing at
the close of which the United States, in its final
submissions, requested it to adjudge and
declare, inter alia,that the Iranian Government
had violated its international legal obligations
to the United States and must: ensure the
immediate release of the hostages; aford the
United
States
diplomatic
and
consular
personnel the protection and immunities to
which they were entitled (including immunity
from criminal jurisdiction) and provide them
with facilities to leave Iran; submit the persons
responsible for the crimes committed to the
competent Iranian authorities for prosecution,
or extradite them to the United States; and pay

the United States reparation, in a sum to be

subsequently determined by the Court.
Iran took no part in the proceedings. It neither
filed pleadings nor was represented at the
hearing, and no submissions were therefore
presented on its behalf. Its position was
however defined in two letters addressed to
the Court by its Minister for Foreign Afairs on 9
December
1979
and16 March 1980
respectively.
In
these
the
Minister
maintained inter alia that the Court could not
and should not take cognizance of the case.
The Facts (paras. 11-32)
The Court expresses regret that Iran did not
appear before it to put forward its arguments.
The absence of Iran from the proceedings
brought into operation Article 53 of the Statute,
under which the Court is required, before
finding in the Applicant's favour, to satisfy itself
that the allegations of fact on which the claim
is based are well founded.
In that respect the Court observes that it has
had available to it, in the documents presented
by the United States, a massive body of
information from various sources, including
numerous official statements of both Iranian
and United States authorities. This information,
the Court notes, is wholly concordant as to the
main facts and has all been communicated to
Iran without evoking any denial. The Court is
accordingly satisfied that the allegations of fact
on which the United States based its claim
were well founded.
Admissibility (paras. 33-44)
Under the settled jurisprudence of the Court, it
is bound, in applying Article 53 of its Statute, to
investigate, on its own initiative, any
preliminary question of admissibility or
jurisdiction that may arise.

On the subject of admissibility, the Court, after

examining the considerations put forward in
the two letters from Iran, finds that they do not
disclose any ground for concluding that it could
not or should not deal with the case. Neither
does it find any incompatibility with the
continuance of judicial proceedings before the
Court in the establishment by the SecretaryGeneral of the United Nations, with the
agreement of both States, of a Commission
given a mandate to undertake a fact-finding
mission to Iran, hear Iran's grievances and
facilitate the solution of the crisis between the
two countries.
Jurisdiction (paras. 45-55)
Four instruments having been cited by the
United States as bases for the Court's
jurisdiction to deal with its claims, the Court
finds that three, namely the Optional Protocols
to the two Vienna Conventions of 1961 and
1963 on, respectively, Diplomatic and Consular
Relations, and the 1955 Treaty of Amity,
Economic Relations, and Consular Rights
between the United States and Iran, do in fact
provide such foundations.
The Court, however, does not find it necessary
in the present Judgment to enter into the
question whether Article 13 of the fourth
instrument so cited, namely the 1973
Convention on the Prevention and Punishment
of Crimes against Internationally Protected
Persons including Diplomatic Agents, provides
a basis for the exercise of its jurisdiction with
respect
to
the
United
States'
claims
thereunder.
MERITS: Attributability to the Iranian State of
the acts complained of, and violation by Iran of
certain obligations (paras. 56-94)
The Court has also, under Article 53 of its
Statute, to satisfy itself that the claims of the

Applicant are well founded in law. To this end, it

considers the acts complained of in order to
determine how far, legally, they may be
attributed to the Iranian State (as distinct from
the occupiers of the Embassy) and whether
they are compatible or incompatible with Iran's
obligations under treaties in force or other
applicable rules of international law.
(a) The events of 4 November 1979 (paras. 5668)
The first phase of the events underlying the
Applicant's claims covers the armed attack on
the United States Embassy carried out on 4
November 1979 by Muslim Student Followers
of the Imam's Policy (further referred to as "the
militants" in the Judgment), the overrunning of
its premises, the seizure of its inmates as
hostages, the appropriation of its property and
archives, and the conduct of the Iranian
authorities in the face of these occurrences.
The Court points out that the conduct of the
militants on that occasion could be directly
attributed to the Iranian State only if it were
established that they were in fact acting on its
behalf. The information before the Court did
not suffice to establish this with due certainty.
However, the Iranian State - which, as the
State to which the mission was accredited, was
under obligation to take appropriate steps to
protect the United States Embassy - did
nothing to prevent the attack, stop it before it
reached its completion or oblige the militants
to withdraw from the premises and release the
hostages. This inaction was in contrast with the
conduct of the Iranian authorities on several
similar occasions at the same period, when
they
had
taken
appropriate
steps.
It
constituted, the Court finds, a clear and serious
violation of Iran's obligations to the United
States under Articles 22 (2), 24, 25, 26, 27 and
29 of the 1961 Vienna Convention on
Diplomatic Relations, of Articles 5 and 36 of the

1963 Vienna Convention on Consular Relations,

and of Article 11 (4) of the 1955 Treaty. Further
breaches of the 1963 Convention had been
involved in failure to protect the Consulates at
Tabriz and Shiraz.
The Court is therefore led to conclude that on 4
November 1979 the Iranian authorities were
fully aware of their obligations under the
conventions in force, and also of the urgent
need for action on their part, that they had the
means at their disposal to perform their
obligations, but that they completely failed to
do so.
(b) Events since 4 November 1979 (paras. 6979)
The second phase of the events underlying the
United States' claims comprises the whole
series of facts which occurred following the
occupation of the Embassy by the militants.
Though it was the duty of the Iranian
Government to take every appropriate step to
end the infringement of the inviolability of the
Embassy premises and staf, and to ofer
reparation for the damage, it did nothing of the
kind. Instead, expressions of approval were
immediately heard from numerous Iranian
authorities.
Ayatollah
Khomeini
himself
proclaimed the Iranian State's endorsement of
both the seizure of the premises and the
detention of the hostages. He described the
Embassy as a "centre of espionage", declared
that
the
hostages
would
(with
some
exceptions) remain "under arrest" until the
United States had returned the former Shah
and his property to Iran, and forbade all
negotiation with the United States on the
subject. Once organs of the Iranian State had
thus given approval to the acts complained of
and decided to perpetuate them as a means of
pressure on the United States, those acts were
transformed into acts of the Iranian State: the
militants became agents of that State, which

itself became internationally responsible for

their acts. During the six months which ensued,
the situation underwent no material change:
the Court's Order of 15 December 1979 was
publicly rejected by Iran, while the Ayatollah
declared that the detention of the hostages
would continue until the new Iranian
parliament had taken a decision as to their
fate.
The Iranian authorities' decision to continue
the subjection of the Embassy to occupation,
and of its staf to detention as hostages, gave
rise to repeated and multiple breaches of Iran's
treaty obligations, additional to those already
committed at the time of the seizure of the
Embassy (1961 Convention: Arts. 22, 24, 25,
26, 27 and 29 1963 Convention: inter alia, Art.
33; 1955 Treaty, Art. II (4)).
With regard to the Charg d'afaires and the
two other members of the United States
mission who have been in the Iranian Ministry
of Foreign Afairs since 4 November 1979 the
Court finds that the Iranian authorities have
withheld from them the protection and facilities
necessary to allow them to leave the Ministry
in safety. Accordingly, it appears to the Court
that in their respect there have been breaches
of Articles 26 and 29 of the 1961 Vienna
Convention.
Taking note, furthermore, that various Iranian
authorities have threatened to have some of
the hostages submitted to trial before a court,
or to compel them to bear witness, the Court
considers that, if put into efect, that intention
would constitute a breach of Article 31 of the
same Convention.
(c) Possible
existence
circumstances (paras. 80-89)

of

special

The Court considers that it should examine the

question whether the conduct of the Iranian

Government might be justified by the existence

of special circumstances, for the Iranian
Minister for Foreign Afairs had alleged in his
two letters to the Court that the United States
had carried out criminal activities in Iran. The
Court considers that, even if these alleged
activities could be considered as proven, they
would not constitute a defence to the United
States' claims, since diplomatic law provides
the possibility of breaking of diplomatic
relations,
or
of
declaring persona
non
"rata members of diplomatic or consular
missions who may be carrying on illicit
activities. The Court concludes that the
Government of Iran had recourse to coercion
against the United States Embassy and its staf
instead of making use of the normal means at
its disposal.
(d) International responsibility (paras. 90-92)
The Court finds that Iran, by committing
successive and continuing breaches of the
obligations laid upon it by the Vienna
Conventions of 1961 and 1963, the 1955
Treaty, and the applicable rules of general
international law, has incurred responsibility
towards the United States. As a consequence,
there is an obligation on the part of the Iranian
State to make reparation for the injury caused
to the United States. Since, however, the
breaches are still continuing, the form and
amount of such reparation cannot yet be
determined.
At the same time the Court considers it
essential to reiterate the observations it made
in its Order of 15 December 1979 on the
importance of the principles of international
law governing diplomatic and consular
relations. After stressing the particular gravity
of the case, arising out of the fact that it is not
any private individuals or groups that have set
at naught the inviolability of an embassy, but
the very government of the State to which the

mission is accredited, the Court draws the

attention of the entire international community
to the irreparable harm that may be caused by
events of the kind before the Court. Such
events cannot fail to undermine a carefully
constructed edifice of law the maintenance of
which is vital for the security and well-being of
the international community.

Decides that the Islamic Republic of Iran, by

the conduct which the Court has set out in this
Judgment, has violated in several respects, and
is skill violating, obligations owed by it to the
United States of America under international
conventions in force between the two
countries, as well as under long-established
rules of general international law;

(e) United States operation in Iran on 24-25

April 1980 (paras. 93 and 94)

2. By thirteen votes [President Sir Humphrey

Waldock; Vice-President Elias; Judges Forster,
Gros, Lachs, Nagendra Singh, Ruda, Mosler,
Oda, Ago, El-Erian, Sette-Camara and Baxter.]
to two [Judges Morozov and Tarazi.],

With regard to the operation undertaken in Iran

by United States military units on 2425 April 1980, the Court says that it cannot fail
to express its concern. It feels bound to
observe that an operation undertaken in those
circumstances, from whatever motive, is of a
kind calculated to undermine respect for the
judicial process in international relations.
Nevertheless, the question of the legality of
that operation can have no bearing on the
evaluation of Iran's conduct on 4 November
1979. The findings reached by the Court are
therefore not afected by that operation.
*
**
For these reasons, the Court gives the decision
reproduced in full below.
OPERATIVE PART OF JUDGMENT
THE
COURT,*
[Composed
as
follows: President Sir Humphrey Waldock; VicePresident Elias; Judges Forster, Gros, Lachs,
Morozov, Nagendra Singh, Ruda, Mosler, Tarazi,
Oda, Ago, El-Erian, Sette-Camara and Baxter.]
1. By thirteen votes [President Sir Humphrey
Waldock; Vice-President Elias; Judges Forster,
Gros, Lachs, Nagendra Singh, Ruda, Mosler,
Oda, Ago, El-Erian, Sette-Camara and Baxter.]
to two [Judges Morozov and Tarazi.],

Decides that the violations of these obligations

engage the responsibility of the Islamic
Republic of Iran towards the United States of
America under international law;
3. Unanimously,
Decides that the Government of the Islamic
Republic of Iran must immediately take all
steps to redress the situation resulting from the
events of 4 November 1979 and what followed
from these events, and to that end:
(a) must immediately terminate the unlawful
detention of the United States Charg
d'afaires and other diplomatic and consular
staf and other United States nationals now
held hostage in Iran, and must immediately
release each and every one and entrust them
to the protecting Power (Article 45 of the 1961
Vienna Convention on Diplomatic Relations);
(b) must ensure that all the said persons have
the necessary means of leaving Iranian
territory, including means of transport;
(c) must immediately place in the hands of the
protecting Power the premises, property,
archives and documents of the United States
Embassy in Tehran and of its Consulates in
Iran;

4. Unanimously,
Decides that no member of the United States
diplomatic or consular staf may be kept in Iran
to be subjected to any form of judicial
proceedings or to participate in them as a
witness;
5. By twelve votes [President Sir Humphrey
Waldock; Vice-President Elias; Judges Forster,
Gros, Nagendra Singh, Ruda, Mosler, Oda, Ago,
El-Erian, Sette-Camara and Baxter.] to three
[JudgesLachs, Morozov and Tarazi.],
Decides that the Government of the Islamic
Republic of ban is under an obligation to make
reparation to the Government of the United
States of America for the injury caused to the
latter by the events of 4 November 1979 and
what followed from these events;
6. By fourteen votes [President Sir Humphrey
Waldock; Vice-President Elias; Judges Forster,
Gros, Lachs, Nagendra Singh, Ruda, Mosler,
Tarazi, Oda, Ago, El-Erian, Sette-Camara and
Baxter.] to one [Judge Morozov.],
Decides that the form and amount of such
reparation, failing agreement between the
Parties, shall be settled by the Court, and
reserves for this purpose the subsequent
procedure in the case.
__________
SUMMARY OF OPINIONS APPENDED TO THE
JUDGMENT
Judge Lachs indicated that he voted against the
first part of operative paragraph 5, as he found
it redundant. The responsibility having been
established, the whole question of reparations
should have been left to the subsequent
procedure, including the question of form and
amount as provided by the Judgment.

The opinion stresses the importance of the

Judgment for diplomatic law, and the major
part of it is devoted to the question of the
practical solution by diplomatic means of the
dispute between the Parties. Once the legal
issues have been clarified by the Judgment, the
parties should take speedy action and make
maximum eforts to dispel tension and
mistrust, and in this a third-party initiative may
be important. Judge Lachs visualizes a
particular role for the Secretary-General of the
United Nations in this respect and the work of a
special commission or mediating body. In view
of the gravity of the situation, the need for a
resolution is urgent.
*
**
In
his
dissenting
opinion, Judge
Morozov indicates that operative paragraph 1
of the Judgment is drafted in such a way that it
is not limited to the question of the violation of
the Vienna Conventions of 1961 and 1963, but
also covers, if read with some paragraphs of
the reasoning, the question of alleged
violations of the 1955 Treaty of Amity,
Economic Relations and Consular Rights
between Iran and the United States; this treaty,
he believes, does not provide the parties with
an
unconditional
right
to
invoke
the
compulsory jurisdiction of the Court, and in the
circumstances the Court has in fact no
competence to consider the alleged violations.
Furthermore, Judge Morozov observes, the
United States committed during the period of
the judicial deliberations many unlawful
actions, culminating in the military invasion of
the territory of the Islamic Republic of Iran, and
has therefore lost the legal right to refer to the
Treaty in its relations with Iran.

Judge Morozov voted against operative

paragraphs 2, 5 and 6 because he had noted
that a series of actions was undertaken by the
United States of America against Iran in the
course of the judicial deliberations, in particular
the freezing by the United States of very
considerable Iranian assets, combined with the
intention, clearly expressed in a statement
made by the President of the United States on
7 April 1980 to make use of these assets, if
need be, in accordance with decisions that
would betaken in the domestic framework of
the United States; that meant that the United
States was acting as a "judge" in its own cause.
In Judge Morozov's view, the situation, created
by actions of the United States, in which the
Court carried on its judicial deliberations in the
case had no precedent in the whole history of
the administration of international justice
either before the Court or before any other
international judicial institution. The United
States, having caused severe damage to Iran,
had lost the legal as well as the moral right to
reparations from Iran, as mentioned in
operative paragraphs 2, 5 and 6.
Judge Morozov also finds that some paragraphs
of the reasoning part of the Judgment describe
the circumstances of the case in an incorrect or
one-sided way.
He considers that, without any prejudice to the
exclusive competence of the Security Council,
the Court, from a purely legal point of view,
could have drawn attention to the undeniable
fact that Article 51 of the United Nations
Charter, establishing the right of self-defence
to which the United States of America referred
in connection with the events of 24-25 April,
may be invoked only "if an armed attack occurs
against a member of the United Nations", and
that there is no evidence of any armed attack
having occurred against the United States.

Judge Morozov also stresses that some

indication should have been included in the
Judgment to the efect that the Court
considered that settlement of the dispute
between the United States and the Islamic
Republic of Iran should be reached exclusively
by peaceful means.
*
**
Judge Tarazi voted in favour of operative
paragraphs 3 and 4 of the Judgment, because
he considered that the seizure of the embassy,
and the detention as hostages of those present
in it, constituted an act in breach of the
provisions of the 1961 and 1963 Vienna
Conventions on Diplomatic and Consular
Relations.
On the other hand, Judge Tarazi felt impelled to
vote against operative paragraph 1, because
he considered that only the 1961 and 1963
Vienna Conventions conferred jurisdiction on
the Court in the present case.
He also voted against paragraphs 2 and 5,
because, in his view, the Court, at the present
stage of the proceedings and considering the
concomitant circumstances, could not make
any ruling as to the responsibility of the
Government of the Islamic Republic of Iran.
On the other hand, Judge Tarazi voted in favour
of paragraph 6, because he considered that, in
the event of any reparations being owed, they
should be determined and assessed by the
International Court of Justice; it was not
admissible for them to be the subject of
proceedings in courts of domestic jurisdiction
NOTTEBOHM CASE (SECOND PHASE)
Judgment of 6 April 1955

The Nottebohm case had been brought to the

Court by an Application by the Principality of
Liechtenstein
against
the
Republic
of
Guatemala.
Liechtenstein
claimed
restitution
and
compensation on the ground that the
Government of Guatemala had acted towards
Mr. Friedrich Nottebohm, a citizen of
Liechtenstein, in a manner contrary to
international law. Guatemala, for its part,
contended that the claim was inadmissible on a
number of grounds, one of which related to the
nationality of Nottebohm, for whose protection
Liechtenstein had seised the Court.
In its Judgment the Court accepted this latter
plea in bar and in consequence held
Liechtenstein's claim to be inadmissible.
The Judgment was given by eleven votes to
three. Judges Klaestad and Read, and
M. Guggenheim, Judge ad hoc, appended to the
Judgment statements of their dissenting
opinions.
**
In its Judgment the Court affirmed the
fundamental importance of the plea in bar
referred to above. In putting forward this plea,
Guatemala referred to the well-established
principle that it is the bond of nationality
between the State and the individual which
alone confers upon the State the right of
diplomatic protection. Liechtenstein considered
itself to be acting in conformity with this
principle and contended that Nottebohm was,
in fact, its national by virtue of the
naturalization conferred upon him.
The Court then considered the facts.
Nottebohm, born at Hamburg, was still a
German national when, in October 1939, he
applied for naturalization in Liechtenstein. In

1905 he went to Guatemala, which he made

the centre of his business activities, which
increased and prospered. He sometimes went
to Germany on business and to other countries
for holidays, and also paid a few visits to
Liechtenstein, where one of his brothers had
lived since 1931; but he continued to have his
fixed abode in Guatemala until 1943, that is to
say, until the events which constituted the
basis of the present dispute. In 1939 he left
Guatemala at approximately the end of March;
he seems to have gone to Hamburg and to
have paid a few brief visits to Liechtenstein,
where he was at the beginning of October
1939. It was then, on 9th October, 1939, a little
more than a month after the opening of the
Second World War, marked by Germany's
attack on Poland, that he applied for
naturalization in Liechtenstein.
The necessary conditions for the naturalization
of foreigners in Liechtenstein are laid down by
the Liechtenstein Law of 4th January, 1934.
This Law requires among other things: that the
applicant for naturalization must prove that
acceptance into the Home Corporation (Heimat
verband) of a Liechtenstein commune has been
promised to him in case of acquisition of the
nationality of the State; that, subject to waiver
of this requirement under stated conditions, he
must prove that he will lose his former
nationality as the result of naturalization; that
he has been resident in the Principality for at
least three years, although this requirement
can be dispensed with in circumstances
deserving special consideration and by way of
exception; that he has concluded an
agreement concerning liability to taxation with
the competent authorities and has paid a
naturalization fee. The Law reveals concern
that naturalization should only be granted with
full knowledge of all the pertinent facts and
adds that the grant of nationality is barred
where circumstances are such as to cause
apprehension that prejudice may enure to the

State of Liechtenstein. As regards the

procedure to be followed, the Government
examines the application, obtains information
concerning
the
applicant,
submits
the
application to the Diet, and, if this application
is approved, submits a request to the Reigning
Prince who alone is entitled to confer
nationality.
In his application for naturalization Nottebohm
also applied for the previous conferment of
citizenship of Mauren, a commune of
Liechtenstein. He sought dispensation from the
condition of three years' prior residence,
without indicating the special circumstances
warranting such a waiver. He undertook to pay
(in Swiss francs) 25,000 francs to the
Commune and 12,500 francs to the State, the
costs of the proceedings, and an annual
naturalization tax of 1,000 francs - subject to
the proviso that the payment of these taxes
was to be set of against ordinary taxes which
would fall due if the applicant took up
residence in Liechtenstein - and to deposit as
security the sum of 30,000 Swiss francs. A
Document dated 15th October, 1939 certifies
that on that date the citizenship of Mauren had
been conferred upon him. A Certificate of 17th
October, 1939 evidences the payment of the
taxes required to be paid. On 20th October
Nottebohm took the oath of allegiance and on
23rd October an arrangement concerning
liability to taxation was concluded. A Certificate
of Nationality was also produced to the efect
that Nottebohm had been naturalized by a
Supreme Resolution of the Prince of 13th
October, 1939. Nottebohm then obtained a
Liechtenstein passport and had it visa-ed by
the Consul General of Guatemala in Zurich on
1st December, 1939, and returned to
Guatemala at the beginning of 1940, where he
resumed his former business activities.
These being the facts, the Court considered
whether the naturalization thus granted could

be validly invoked against Guatemala, whether

it bestowed upon Liechtenstein a sufficient title
to exercise protection in respect of Nottebohm
as against Guatemala and therefore entitled it
to seise the Court of a claim relating to him.
The Court did not propose to go beyond the
limited scope of this question.
In order to establish that the Application must
be held admissible, Liechtenstein argued that
Guatemala had formerly recognized the
naturalization which it now challenged.
Examining Guatemala's
attitude towards
Nottebohm since his naturalization, the Court
considered that Guatemala had not recognized
Liechtenstein's title to exercise protection in
respect to Nottebohm. It then considered
whether the granting of nationality by
Liechtenstein directly entailed an obligation on
the part of Guatemala to recognize its efect, in
other words, whether that unilateral act by
Liechtenstein was one which could be relied
upon against Guatemala in regard to the
exercise of protection. The Court dealt with this
question without considering that of the
validity
of
Nottebohm's
naturalization
according to the Law of Liechtenstein.
Nationality is within the domestic jurisdiction of
the State, which settles, by its own legislation,
the rules relating to the acquisition of its
nationality. But the issue which the Court must
decide is not one which pertains to the legal
system of Liechtenstein; to exercise protection
is to place oneself on the plane of international
law. International practice provides many
examples of acts performed by States in the
exercise of their domestic jurisdiction which do
not
necessarily
or
automatically
have
international efect. When two States have
conferred their nationality upon the same
individual and this situation is no longer
confined within the limits of the domestic
jurisdiction of one of these States but extends
to
the
international
field,
international

arbitrators or the Courts of third States which

are called upon to deal with this situation
would allow the contradiction to subsist if they
confined themselves to the view that
nationality is exclusively within the domestic
jurisdiction of the State. In order to resolve the
conflict they have, on the contrary, sought to
ascertain whether nationality has been
conferred in circumstances such as to give rise
to an obligation on the part of the respondent
State to recognize the efect of that nationality.
In order to decide this question, they have
evolved certain criteria. They have given their
preference to the real and efective nationality,
that which accorded with the facts, that based
on stronger factual ties between the person
concerned and one of these States whose
nationality is involved. Diferent factors are
taken into consideration, and their importance
will vary from one case to the next: there is the
habitual residence of the individual concerned
but also the centre of his interests, his family
ties, his participation in public life, attachment
shown by him for a given country and
inculcated in his children, etc.
The same tendency prevails among writers.
Moreover, the practice of certain States, which
refrain from exercising protection in favour of a
naturalized person when the latter has in fact
severed his links with what is no longer for him
anything but his nominal country, manifests
the view that, in order to be invoked against
another State, nationality must correspond
with a factual situation.
The character thus recognized on the
international level as pertaining to nationality
is in no way inconsistent with the fact that
international law leaves it to each State to lay
down the rules governing the grant of its own
nationality. This is so failing any general
agreement on the rules relating to nationality.
It has been considered that the best way of
making such rules accord with the varying

demographic conditions in diferent countries is

to leave the fixing of such rules to the
competence of each State. But, on the other
hand, a State cannot claim that the rules it has
laid down are entitled to recognition by another
State unless it has acted in conformity with this
general aim of making the nationality granted
accord with an efective link between the State
and the individual.
According to the practice of States, nationality
constitutes the juridical expression of the fact
that an individual is more closely connected
with the population of a particular State.
Conferred by a State, it only entitles that State
to exercise protection if it constitutes a
translation into juridical terms of the
individual's connection with that State. Is this
the case as regards Mr. Nottebohm? At the
time of his naturalization, does Nottebohm
appear to have been more closely attached by
his tradition, his establishment, his interests,
his activities, his family ties, his intentions for
the near future, to Liechtenstein than to any
other State?
In this connection the Court stated the
essential facts of the case and pointed out that
Nottebohm always retained his family and
business connections with Germany and that
there is nothing to indicate that his application
for
naturalization
in
Liechtenstein
was
motivated by any desire to dissociate himself
from the Government of his country. On the
other hand, he had been settled for 34 years in
Guatemala, which was the centre of his
interests and his business activities. He stayed
there until his removal as a result of war
measures in 1943, and complains of
Guatemala's refusal to readmit him. Members
of Nottebohm's family had, moreover, asserted
his desire to spend his old age in Guatemala. In
contrast,
his
actual
connections
with
Liechtenstein were extremely tenuous. If
Nottebohm went to chat country in 1946, this

was because of the refusal of Guatemala to

admit him. There is thus the absence of any
bond of attachment with Liechtenstein, but
there is a long-standing and close connection
between him and Guatemala, a link which his
naturalization in no way weakened. That
naturalization was not based on any real prior
connection with Liechtenstein, nor did it in any
way alter the manner of life of the person upon
whom it was conferred in exceptional
circumstances of speed and accommodation. In
both respects, it was lacking in the
genuineness requisite to an act of such
importance, if it is to be enticed to be
respected by a State in the position of
Guatemala. It was granted without regard to
the concept of nationality adopted in
international relations. Naturalization was
asked for not so much for the purpose of
obtaining a legal recognition of Nottebohm's
membership in fact in the population of
Liechtenstein, as it was to enable him to
substitute for his status as a national of a
belligerent State that of the subject of a neutral
State, with the sole aim of thus coming within
the protection of Liechtenstein but not of
becoming wedded to its traditions, its interests,
its way of life or of assuming the
obligations - other than fiscal obligations - and
exercising the rights pertaining to the status
thus acquired.

Nottebohm (P) travelled to Liechtenstein and

upon his return to Guatemala (D), he was
refused entry because he was deemed to be a
German citizen. His Liechtenstein citizenship
was not honored. Liechtenstein (P) thereby
filed a suit before the International Court to
compel Guatemala (D) to recognize him as one
of its national. Guatemala (D) challenged the
validity of Nottebohms (P) citizenship, the
right of Liechtenstein (P) to bring the action
and alleged its belief that Nottebohm (P)
remained a German national.

For these reasons the Court held the claim of

Liechtenstein to be inadmissible.

Discussion. A state putting forth a claim must

establish a locus standi for that purpose.
Without interruption and continuously from the
time of the injury to the making of an award
been a national of the state making the claim
and must not have been a national of the state
against whom the claim has been filed.
International law 347 (8th Ed. 1955) Vol.1.

Facts. Nottebohn (P), a German by birth, lived

in Guatemala (D) for 34 years, retaining his
German citizenship and family and business
ties with it. He however applied for
Liechtenstein (P) citizenship a month after the
outbreak of World War II. Nottebohm (P) had no
ties with Liechtenstein but intended to remain
in Guatemala. The naturalization application
was approved by Liechtenstein and impliedly
waived its three-year. After this approval,

Issue. Must nationality be disregarded by other

states where it is clear that it was a mere
device since the nationality conferred on a
party is normally the concerns of that nation?
Held. NO. issues relating to citizenship are
solely the concern of the granting nation. This
is the general rule. But it does not mean that
other states will automatically accept the
conferring states designation unless it has
acted in conformity with the general aim of
forging a genuine bond between it and its
national aim. In this case, there was no
relationship between Liechtenstein (P) and
Nottebohm (P). the change of nationality was
merely a subterfuge mandated by the war.
Under this circumstance, Guatemala (D) was
not forced to recognize it. Dismissed.

Nottebohm
Guatemala)

Case

(Liechtenstein

v.

Procedural
History:
Appeal by a state from the refusal of another
state to admit one of its nationals.
Overview:
Nottebohm (P), a German citizen, lived in
Guatemala (D) for 34 years and applied for
Liechtenstein (P) citizenship one month after
the start of World War II. Nottebohm (P) was a
German by birth. Nottebohm (P) lived in
Guatemala (D) for 34 years, retaining his
German citizenship and family and business
ties with it. One month after the outbreak of
World War II, Nottebohm {P) applied for
citizenship with Liechtenstein {P), a neutral
country. Nottebohm (P) had no ties with
Liechtenstein {P) and intended to remain in
Guatemala (D). Liechtenstein (P) approved the
naturalization application and impliedly waived
its
three-year
residency
requirement.
Nottebohm (P) briefly visited Liechtenstein (P)
and, on his return to Guatemala (D), was
refused admittance, being deemed a German
national. Nottebohms (P) Liechtenstein (P)
citizenship was not honored. Liechtenstein {P)
brought an action before the International
Court to compel Guatemala (D) to recognize
Nottebohm (P) as one of its nationals.
Guatemala (D) challenged the validity of
Nottebohms (P) citizenship, the right of
Liechtenstein (P) to bring the action and
alleged its belief that Nottebohm (P) remained
a
German
national.
Issue:
Must a nation automatically recognize the
citizenship conferred on a party by another
nation?
Outcome:
-No. As a general rule, matters concerning
citizenship are solely the concern of the
granting nation. It alone will normally bear the
burdens or attain the benefits from the

conferral of citizenship on a party. However,

the conferring state may not require other
states to automatically accept its designation
unless it has acted in conformity with the
general aim of forging a genuine bond between
it and its national. Here, no relationship exists
between Liechtenstein {P) and Nottebohm (P).
There was never an intent to reside in
Liechtenstein (P), no business or family
connections, no acceptance of traditions and
the severing of old ties, etc. The change in
nationality was a mere convenience/subterfuge
mandated
by
the
war.
Under
such
circumstances, Guatemala (D) was not forced
to
recognize
it.
Dismissed.
Rule:
while nationality conferred on a party is
normally only the concern of that nation, such
nationality may be disregarded by other states
where it is clear that it was a mere
device/subterfuge.
Analysis:
A state putting forth a claim must establish a
locus standi for that purpose. This is almost
exclusively a showing of nationality of the
claimant The real claimant must have
continuously and without interruption from the
time of the injury to the making of an award
been a national of the state making the claim
and must not have been a national of the state
against whom the claim has been filed.
International Law 347 (8th Ed. 1955) Vol. 1.
ASIAN AGRICULTURAL PRODUCTS v SRI
LANKA
A. Introduction
1 This arbitration is the first in
jurisdiction of the International
Settlement of Investment Disputes
based directly upon a bilateral
treaty (BIT) and not on a

which the
Centre for
(ICSID) was
investment
negotiated

arbitration agreement concluded directly

between the parties to the dispute (Investment
Disputes;Investments,
Bilateral
Treaties); Negotiation; see also Compromis)..
Due to this lack of an express agreement by
the parties, there was no opportunity to agree
on the choice of law. Therefore, the first
interesting question concerned the law
applicable to the dispute. Furthermore, the
meaning of the obligation to provide full
protection and security contained in a BIT
represented a specific challenge to the
tribunal. It had to be interpreted and applied in
the context of a situation of severe internal
unrest.(International
Courts
and
Tribunals; Interpretation in International Law).
The tribunal weighed it against the customary
international lawobligation of due diligence,
and against the obligation of compensation for
losses owing to war, revolt, insurrection or riot,
the latter being a provision contained in a great
number of BITs (Compensation;Reparations).
Finally, the tribunal had to decide on the
amount of damages, in particular on the
applicability of the discounted cash flow
method, and on the question of interest. The
award was based on a majority vote, one
arbitrator appending an extensive dissenting
opinion.
B. Summary of Facts and Contentions
2 The claimant, a company incorporated in
Hong Kong, had invested in Sri Lanka through
equity participation in Serendib Seafoods Ltd
(Serendib), a Sri Lankan public company
established in 1983 for the purpose of
cultivating and exporting shrimp. Serendib
commenced operations in 1986 from its
principal facility, a shrimp farm, in Eastern Sri
Lanka. This area, however, became severely
afected by a major insurrection of the Tamil
rebels in 1986. On 28 January 1987, during a
counter insurgency operation conducted by the

Sri Lankan security forces, Serendibs farm was

destroyed.
3 In July 1987, the claimant filed a request for
arbitration with ICSID pursuant to Art. 8 (1)
Agreement for the Promotion and Protection of
Investments (United Kingdom of Great Britain
and Northern IrelandSri Lanka) (UK/Sri Lanka
Agreement), claiming compensation from Sri
Lanka for the destruction of the farm
(Investments, International Protection). It
contended that Sri Lanka had violated its
obligation to provide full protection and
security according to Art. 2 UK/Sri Lanka
Agreement and therefore was internationally
responsible for the damage sufered, ie the
complete destruction of the farm (State
Responsibility). As an alternative submission,
the claimant relied on a supplementary
argument based on Art. 4 (2) UK/Sri Lanka
Agreement, namely the right to restitution or
adequate compensation for the destruction of
property by the States security forces not
caused in combat action or not required by the
necessity of the situation (Security; see
also Military Necessity).
4 The respondent submitted that the standard
of protection referred to by Art. 2 (2) UK/Sri
Lanka Agreement to provide full protection
and security only required due diligence on
the part of the State and reasonable
justification for any destruction of property, but
did not impose strict liability (Property, Right
to, International Protection; see also Liability
for Lawful Acts). The government of Sri Lanka
had acted in pursuance of its sovereign right
and duty to regain control and restore security
in the region (Sovereignty). It maintained that
the destruction of Serendibs property was due
to intense combat action between the Tamil
rebels known as the Tigers, who were allegedly
operating out of Serendibs farm and violently
resisted the counter-insurgency operation. The
respondent emphasized that it would be ready

to compensate for losses caused by excessive

destruction. It doubted, however, whether this
could be assessed by the tribunal without
second-guessing tactical decisions made by
commanders during the heat of combat. It was
submitted that by investing in an area known
as containing a vehement, and potentially
violent, separatist presence, the claimant
assumed the risk that its investment would be
caught up in the Sri Lankan civil war.
C. The Substantive Issues
1. Applicable Law
5 Due to the absence of a freely negotiated
arbitration agreement directly concluded
between the parties among whom the dispute
had arisen, there was no express choice of law
to govern the dispute. The tribunal, however,
found that the parties had acted in a manner
that demonstrated their mutual agreement to
consider the provisions of the UK/Sri Lanka
Agreement as the primary source of the
applicable legal rules (see alsoSources of
International Law). It referred, in particular, to
the written and oral submissions of both
parties in which they had relied primarily on
this treaty as lex specialis and, within the limits
required, on the relevant international or
domestic legal rules as a supplementary source
(see also International Law and Domestic
[Municipal] Law).
6 The dissenting arbitrator submitted, by
contrast, that the response by one party to the
interpretation of particular provisions of the
treaty by the other did not necessarily imply
that the parties agreed that the treaty
constituted the primary source of legal
obligations but simply demonstrated prudence
and caution on both sides. As there was no real
agreement between the parties as to the rules
of law which should govern the dispute, Art. 42
(1) sentence 2 Convention on the Settlement of

Investment Disputes between States and

Nationals of Other States should have prevailed
which pointed to the law of the host State, thus
Sri Lankan law, as the main source of law,
together with such rules of international law as
may be applicable.
2. Full Protection and Security
7 The
tribunal
noted
the
fundamental
diferences of the parties with regard to the
meaning of the obligation to provide full
protection and security embodied in Art. 2 (2)
UK/Sri Lanka Agreement. The claimant
submitted that this obligation went beyond
the minimum
standards of
customary
international law and created an unconditional
obligation to be borne by the host country.
According to the claimant, the ordinary
meaning of the words full protection and
security (Art. 2 (2) UK/Sri Lanka Agreement) as
well as their interpretation in the context and
with regard to the object and purpose of the
UK/Sri Lanka Agreement pointed to the
acceptance by the host State of strict or
absolute liability.
8 After a detailed analysis of the rules of treaty
interpretation enshrined in Art. 31 Vienna
Convention on the Law of Treaties (1969),
relevant case-law and the opinions of legal
scholars, the tribunal refused to accept thatArt.
2 (2) UK/Sri Lanka Agreement imposed a strict
liability in the event of failure to provide full
protection and security. Such a liability was
also not contained in other BITs concluded by
Sri Lanka, such as the one with Switzerland
submitted by the claimant. It therefore could
not be invoked by virtue of the most-favourednation clause contained in Art. 3 UK/Sri Lanka
Agreement, either.
9 With regard to the claimants alternative
submission concerning the obligation to
provide compensation for losses owing to war,

revolt, insurrection or riot embodied in Art. 4

UK/Sri Lanka Agreement, the tribunal did not
find convincing evidence proving that the
losses were incurred due to acts committed by
the governmental forces and not by the rebels,
or that the destruction and losses were not
caused by the necessity of the situation
(International Courts and Tribunals, Evidence).
Instead, it was of the opinion that the losses
occurred in combat action which only obliged
the host government to treatment no less
favourable than that which it accords to its own
nationals or companies or to nationals or
companies of any third State.
10 The tribunal noted that this obligation did
not
include
any
substantive
rule
providing remedies to the foreign investor. It
emphasized, however, that it contained an
indirect rule the function of which was to efect
a reference towards other sources which
indicate the solution to be followed. By this
renvoi, the host States responsibility became
engaged if a failure to comply with its due
diligence obligation under the minimum
standard of customary international law were
established.
11 The tribunal, therefore, turned to the
question whether Sri Lankas responsibility
could be sustained under international law,
applicable by virtue of the renvoi provided for
in Art. 4 UK/Sri Lanka Agreement, combined
with the conventional standard of full
protection and security stipulated in Art. 2 (2)
UK/Sri Lanka Agreement. After a review of the
evidence submitted by both parties the tribunal
came to the conclusion that the governmental
authorities should have undertaken important
precautionary measures to get all suspected
persons peacefully out of Serendibs farm
before launching the attack (Precautionary
Approach/Principle). If they had information
that the rebels used the farm as a base of
operations and support, the legitimate

expected course of action against those

suspected persons would have been either to
institute judicial investigations against them or
to undertake the necessary measures in order
to get them of the companys farm. The failure
to do so was particularly serious in view of the
fact that the highest executive officer of
Serendib had confirmed his willingness to
comply with any governmental request in this
respect just ten days before. Accordingly, the
respondent had violated its due diligence
obligation by not taking all possible measures
that could be reasonably expected to prevent
the eventual occurrence of killings and
property
destruction.
It
was
therefore
responsible under international law.
12 The
dissenting
arbitrator
submitted,
however, that the precautionary measure
envisaged by the majority opinion would only
have been a reasonable police measure if the
situation to be addressed were no more than
an ordinary case of civil disorder. By contrast,
in the face of a major insurrection launched by
well-armed
insurgents
engaged
in
a
sophisticated guerrilla warfare against the
government (Land Warfare; Warfare, Methods
and Means), it would be unrealistic and
unreasonable to expect the government to
remove suspect rebels from the farm by
peaceful means before launching a sensitive
security operation in the area (Reasonableness
in International Law).
3. Damages
13 According to the tribunal both parties were
in agreement about the principle, according to
which, in the case of property destruction, the
amount of compensation due has to be
calculated in a manner that adequately reflects
the full value of the investment lost, thus, the
value of the claimants shareholding in
Serendib. The tribunal held that in the absence
of a stock market at which the shares were

quoted, it must, by an alternative method,

determine the price a reasonable purchaser
would have ofered the claimant on the day
before the destruction of the shrimp farm.
14 The tribunal first turned to the evaluation of
the companys tangible assets, such as the
balance of global assets and outstanding
indebtedness. Second, the tribunal examined
the compensability of intangible assets as
claimed by the claimant, mainly goodwill, and
loss of future profits. In the opinion of the
tribunal goodwill required prior presence on the
market for at least two or three years.
Serendib, however, had operated for less than
one year. Furthermore it did not have records
of profits and appeared under-capitalized. The
tribunal therefore rejected the application of
the discounted cash flow method as a tool to
assess the companys future profitability. It
came to the conclusion that neither the
goodwill nor the future profitability could
reasonably be established with a sufficient
degree of certainty. The amount awarded
should therefore represent only the value of
the tangible assets of the destroyed shrimp
farm.
4. Interest
15 Referring to the decision in the Alabama
arbitration and other international arbitrations,
the tribunal held that interest had to be
considered as an integral part of the
compensation itself. It decided that interest at
a rate of 10% per annum should run from the
date
when
the
States
international
responsibility became engaged. According to
the tribunal, this was 9 July 1987, the day after
the claimants submission of the request for
arbitration.
D. Conclusion

16 The difficulty in this case lay in particular in

the determination of the host States
responsibility for damages incurred by a
foreign investor during an internal armed
conflict (Armed Conflict, Non-International). As
the tribunal correctly pointed out, a State on
whose territory an insurrection occurs is not
responsible for loss or damage sustained by
foreign investors, unless it fails to provide the
standard of protection required by international
law, either by treaty or under customary
international law. If such standard is not
provided,
the
State
is
internationally
responsible, regardless of whether the damage
occurred during an insurgents ofensive act or
resulted from governmental counter-insurgency
activities. The level of protection required by
international law has been the subject of a
great number of awards and scholarly writings.
According to the arbitral decision on
the Spanish Zone of Morocco Claims the
degree of vigilance required would difer
according to the circumstances. In the absence
of any higher standard provided for by the
treaty, the degree of security reasonably

expected would be necessary. The tribunal in

the present case did not elaborate on the
question whether the treaty obligation to
provide full protection and security (Art. 2 (2)
UK/Sri Lanka Agreement) would be stricter than
the due diligence obligation already required
under customary international law. In view of
the facts it came to the conclusion that even
the latter standard of protection had not been
met and that the States international
responsibility was engaged, regardless of
whether the damage was caused by the
government security forces or by the rebels.
17 On the other hand, the tribunal drastically
reduced the amount of damages claimed. The
reasoning on this question is disputable. In
particular, the standard of prompt, adequate
and
efective
compensation
was
only
contained in the provision on compensation for
expropriation
in Art.
5
UK/Sri
Lanka
Agreement and not in the other UK/Sri Lanka
Agreement provisions applied in this case. The
tribunal referred to the agreement of both
parties (AAPL v Sri Lanka Case para. 88) to the
efect that the amount due was to be

calculated on the basis of the full value (ibid)

and, thus, the fair market value of the
investment.
18 It is questionable whether the estimations
of a hypothetical buyer with regard to the
value of an asset can adequately reflect the
damage actually incurred to a foreign investor.
This is particularly true in light of on-going
internal unrest when a reasonable buyer might
not envisage future prospects of the asset at
all and thus allocate a fair market value
approximating zero. The separation of tangible
assets from goodwill and future profitability in
determining fair market value would not be in
accordance with common economic valuation
techniques. Instead, the principle of full
reparation as formulated by the Permanent
Court of International Justice (PCIJ) in Factory at
Chorzw (Germany v Poland) should be
followed according to which the financial
situation of the afected individual before and
after the unlawful act of the State must be
compared (German Interests in Polish Upper
Silesia, Cases concerning the ; Reparations).