1. Introductory remarks
A proper analysis of the influence of domestic courts on the content and implementation of state responsibility must start with a number of clarifications and preliminary considerations. Most of these are covered by Simon Olleson in his paper,Footnote 1 and his considerations in respect of the origin or engagement of responsibility apply, mutatis mutandis, also to the present article. A major point of distinction, however, lies in the fact that whereas the rules on the origin or engagement of state responsibility are commonly international in nature, there is a considerable overlap between domestic and international rules governing the content and implementation. In other words, unlike municipal law on attribution, the domestic rules have usually more to offer in terms of remedies, reparation, and invocation than the rather general and limited set of principles of international law.
A general look at the problem reveals a quite amorphous picture, and an assessment of national courts’ treatment of issues concerning the content and implementation of international responsibility is complicated by several factors. First, there are a number of constellations in which issues of reparation or implementation of state responsibility may be involved in domestic court proceedings, and the degree to which domestic courts may have a say on issues of international responsibility will vary according to each of these constellations. It will, for instance, make a difference whether the state, whose alleged responsibility for an internationally wrongful act is in dispute, is a party to these proceedings or whether the alleged responsibility is only a preliminary matter and thus incidental to the main proceedings between private parties.Footnote 2
Furthermore, any assessment of the engagement of domestic courts in determining issues of state responsibility will depend on whether the alleged responsibility is that of the forum state or that of another. In the latter case the law of foreign sovereign immunity often will be a bar to the exercise of jurisdiction even if such jurisdiction does exist according to the applicable rules of international law and the law of the forum state.Footnote 3 Also, if the state is not a party to the proceedings or has not submitted to the jurisdiction of the domestic court, aspects of the act of state doctrine may become relevant. A more general aspect concerning the litigation strategy of the parties in the proceedings is whether issues of international responsibility are raised by the parties at all.
Most cases in which the content of international responsibility, and particularly questions of remedies, arise in domestic proceedings as a matter of international law concern proceedings involving individuals as plaintiffs.Footnote 4 This is not surprising, and it is an aspect of the inward-looking character of the relevant norms at issue. According to this distinction, inward-looking norms are aimed at producing effects within the state, as distinct from outward-looking norms of traditional international law which govern state-to-state conduct without any intended effects within the state.Footnote 5 The former usually impose an obligation on the state to take action or to refrain from acting within the domestic legal sphere, which in turn raises the likelihood that domestic courts will, at some stage of a legal dispute concerning such inward-looking norms, become involved. State-to-state disputes, not to mention those concerning questions of international responsibility, usually do not come within the purview of domestic courts.Footnote 6 In practice, most of the cases in which inward-looking norms are at issue involve private individuals and concern human rights obligations – unsurprisingly since the law of human rights is the field par excellence in which individuals play a central role in the application of international norms in domestic law.
As a final preliminary point we have to clarify what state responsibility means in this context. It stands to reason that the principal yardstick against which to measure the relevance of domestic courts is the body of rules on state responsibility as laid down in the 2001 ILC Articles.Footnote 7 Thus, for present purposes, the use of the terms ‘content’ and ‘implementation’ of state responsibility are to be understood in the sense of the ILC Articles. Accordingly, ‘content’ means the legal consequences of internationally wrongful acts as contained in Part Two of the Articles (Articles 28–41), whereas ‘implementation’ is to be understood as meaning the way in which the obligations of cessation and reparation (that is, the content of responsibility) are given effect. This is governed by Part Three (Articles 42–54). Yet not only in a formal sense are the ILC Articles the relevant reference point, but also, and no doubt more importantly, in a substantive sense. In particular, the forms of reparation will be governed by Articles 34–8, and in determining the substance of an obligation of reparation these provisions will pave the way. However, the general applicability of the Articles is not apparent in many cases that arise in domestic proceedings, notably those involving individuals. As will be discussed in section 2, this basic question calls for clarification.
The main part of this contribution is devoted to brief analyses of individual domestic cases on issues of reparation (section 3) and standing as an aspect of implementation (section 4). At the outset it must be emphasized that the number of cases discussed is limited to a few cases that are not representative. The selective choice of the cases is owed to several facts, constraints of time and space apart. First, the whole topic has already been treated in great detail elsewhere.Footnote 8 Furthermore, the number of cases in which issues of reparation and implementation of responsibility under international law have been addressed by domestic courts is generally very limited. This limitation is not only a quantitative one, but also bears on the issues involved. Thus implementation is largely confined to questions of invocation, whereas countermeasures do not play a role in domestic proceedings. Finally, this approach invites a descriptive and more detailed discussion of cases, which has the advantage of displaying how domestic courts handle matters of international law on the content of state responsibility. Before turning to the case analysis, I will address the question concerning the scope of application of the ILC Articles to the cases selected.
2. A preliminary question: the personal scope of application of the ILC Articles
As noted, the majority of cases where rules of reparation are applied by domestic courts concern claims for reparation by (private) individuals against a state that has committed a breach of international law towards the individual. The most prominent instances of this kind are, of course, human rights violations, but disputes between a state and an individual in domestic courts and those involving the application of international law are also feasible in other areas, such as in international investment law. While the relevant reference to adjudging the approach of domestic courts towards questions of state responsibility is the 2001 ILC Articles, it is not clear whether these are applicable at all to the relations between states and individuals or non-state entities. At first glance, this question seems moot as the very idea of the codification of the rules of state responsibility by the ILC was precisely to establish a general set of secondary rules that, as the ILC Commentary points out, ‘apply to the whole field of the international obligations of States, whether the obligation is owed to one or several States, to an individual or group, or to the international community as a whole’.Footnote 9 This idea of state responsibility as a coherent ‘system’ of rules is a recurring feature of the Articles,Footnote 10 albeit – and this is a crucial point here – limited to Part One of the Articles,Footnote 11 dealing with the concept of the internationally wrongful act.
The situation with regard to other parts, especially Parts Two and Three on the content and implementation of responsibility – the parts that are of interest for present purposes – is clearly different. Most importantly, Part Two contains an express provision on its scope. Article 33 provides that ‘[t]he obligations of the responsible State set out in this Part may be owed to another State, to several States, or to the international community as a whole, depending in particular on the character and content of the international obligation and on the circumstances of the breach’,Footnote 12 and further that Part Two ‘is without prejudice to any right, arising from the international responsibility of a State, which may accrue directly to any person or entity other than a State’.Footnote 13 Now this would suggest that in contrast to Part One – which is intended to provide rules on the ‘origin’ of state responsibility applicable to any breach of an international obligation by a state, irrespective of whether this obligation is owed to another state or to persons or entities other than states (as subjects of international law) – Part Two is confined to setting forth the rules on the content of the responsibility for breach of inter-state obligations only.Footnote 14 This is confirmed by the Commentary to the Articles. In particular, the commentary to Article 28Footnote 15 provides that:
Article 28 does not exclude the possibility that an internationally wrongful act may involve legal consequences in the relations between the State responsible for that act and persons or entities other than States. This follows from article 1, which covers all international wrongful obligations of the State and not only those owed to other States. Thus State responsibility extends, for example, to human rights violations and other breaches of international law where the primary beneficiary of the obligation breached is not a State. However, while Part One applies to all the cases in which an internationally wrongful act may be committed by a State, Part Two has a more limited scope. It does not apply to obligations of reparation to the extent that these arise towards or are invoked by a person or entity other than a State. In other words, the provisions of Part Two are without prejudice to any right, arising from the international responsibility of a State, which may accrue directly to any person or entity other than a State, and article 33 makes this clear.Footnote 16
Similarly, the Introductory Commentary to Chapter 1 of Part Two clarifies that
Article 33 specifies the scope of the Part, both in terms of the States to which obligations are owed and also in terms of certain legal consequences which, because they accrue directly to persons or entities other than States, are not covered by Parts Two or Three of the Articles.Footnote 17
As for Part Three of the Articles, entitled ‘The Implementation of the International Responsibility of a State’,Footnote 18 a perusal of the relevant Articles shows that they are invariably formulated in terms of the injured state or, per Article 48, of a state ‘other than the injured State’.Footnote 19 On that basis, the commentary to Article 33 expressly states that the ‘articles do not deal with the possibility of the invocation of responsibility by persons or entities other than states’Footnote 20 and refers to the relevant primary norm to determine whether and to what extent persons or entities other than states are entitled to invoke responsibility on their own account.Footnote 21 Thus the Articles concerning both the invocation of responsibility and countermeasures do not apply between a wrongdoing state and an individual or other non-state entity as victim of the breach.
Again, however, the situation is less clear than it seems at first glance. Article 33(2) is a saving clause that suggests neither that the rules on state responsibility to individuals are the same as the ones applicable in inter-state relations, nor that they are different;Footnote 22 Article 33 is silent and does not take a position on this matter, a fact which is at times overlooked in practice. The German Federal Court of Justice (Bundesgerichtshof), for instance, invoked Article 42 in order to demonstrate that under current international law individuals are not entitled to enforce a right of compensation against states.Footnote 23 However, the articles generally, and Article 42 in particular, do not exclude that possibility but leave the matter unregulated. Although Article 33, given its location and wording, is principally concerned with Part Two on the content of responsibility, the introductory commentary to Part Three, by referring to Article 33(2), makes it clear that it extends in scope to Part Three as well.Footnote 24
Further, as the ILC Commentary indicates, the main reason for the limitation of the ‘general regime’ to Part One is that ‘[i]n cases where the primary obligation is owed to a non-State entity, it may be that some procedure is available whereby that entity can invoke the responsibility on its own account and without the intermediation of any State’.Footnote 25 The Commentary mentions complaints procedures under human rights treaties or specific rights of investors under bilateral or regional investment protection agreements. It thus seems that the purpose of the restriction of Part Two to inter-state relations is mainly concerned with issues of implementation, invocation, and enforcement of responsibility, rather than the substantive content of responsibility, especially the forms and extent of reparation. This is also supported by the commentary to Article 33, which states that ‘[t]he articles do not deal with the possibility of the invocation of responsibility by persons or entities other than States, and Paragraph 2 makes this clear’,Footnote 26 but does not mention the content of responsibility or the forms of reparation.
It is against the background of these considerations that, in the context of the forms of reparation, particularly compensation, the ILC Commentary itself heavily draws on the practice of courts and tribunals dealing with claims and disputes involving individuals.Footnote 27 Thus, with regard to Article 36 on compensation, the Commentary states that ‘[t]he rules and principles developed by these bodies in assessing compensation can be seen as manifestations of the general principle stated in article 36’.Footnote 28 If the rules on reparation contained in Part Two were not also applicable to relations between states and non-state entities or individuals, this reference would be out of place. That Article 36 is indeed a relevant yardstick for claims by individuals against states as well is also confirmed by arbitral practice, particularly in the field of investor–state arbitration, subsequent to the adoption of the ILC articlesFootnote 29. With the exception of one case,Footnote 30 the applicability of Article 36 to claims by non-state entities against states was not discussed in great detail or contested but was usually taken as granted.Footnote 31 It follows that with regard to the content of state responsibility (reparation, that is) the ILC Articles may indeed be viewed as providing the general rules on the matter and can legitimately be employed as a reference for analysing the rules on compensation also in relation between states and individuals.Footnote 32
3. Reparation
3.1. Secondary norms of state responsibility in domestic courts
The rules of state responsibility on reparation are secondary rules setting forth the consequences of an international wrong. Here the question arises as to the applicability in municipal law of secondary rules on reparation.Footnote 33 On the face of it, the situation would seem clear in many, if not most, cases as the international-law rules on responsibility, particularly those on reparation, are considered to largely reflect customary international law, and in many jurisdictions customary law is automatically incorporated into domestic law. Hence the secondary rules of state responsibility do not require transformation through legislative implementation.Footnote 34 The situation is, of course, different where these rules form part of a treaty regime, such as in case of treaties on the protection of human rights, where the specific treaty-based secondary rules are transformed together with the primary norms.
The general problem involved here is that it often remains unclear whether the municipal court applied international or domestic law. This may be described as the ‘double life’ or ‘schizophrenic nature’ of international norms which makes it very difficult to assess the influence of domestic-court decisions on the development of international law. To be sure, this problem is not specific to questions of responsibility but has been a recurring theme in the course of this conference.
However, in the context of the operation of state responsibility, these considerations assume a specific note, and there is more to the question of incorporation of international law than the problem just mentioned. For the secondary rules of responsibility are only applicable if there has been a prior violation of a primary norm of international law. It follows in turn that this primary norm itself must be part of, and applicable in, municipal law, otherwise the domestic court will not be able to apply secondary norms of state responsibility. Thus whenever the question arises whether a domestic court may indeed apply a secondary norm of state responsibility, one has to keep in mind the requirement that the primary norm allegedly breached is effective and applicable in national law too. This requirement of ‘double incorporation’ of international law is quite obvious because the effective operation of international law invariably requires its transfer to, and implementation in, domestic law.Footnote 35 But I think it is of special importance in the context of secondary rules of state responsibility because these are an important ‘device’ for ensuring the observance and integrity of international law and thus operate as a sort of substitute for the lack of centralized enforcement mechanisms with compulsory powers in international law.
A related question concerns the general remedies or forms of reparation of the law of state responsibility and their correlation to consequences of breach included in the primary norm itself.Footnote 36 How is it determined whether a primary obligation carries with it its own required consequences for responsibility for its breach? Does it make a difference whether a specific form of reparation is applied under the rules of state responsibility or because it is contained in the primary norm breached? In the LaGrand case, for instance, the United States argued that the treaty practice under the violated primary norm (Article 36 of the Vienna Convention on Consular Relations) showed that the appropriate remedy for a violation was an apology,Footnote 37 indicating that the Vienna Convention itself provided for the remedies of its own breach, which, moreover, was exclusive. For obvious reasons, the International Court was not sympathetic to this argument, although it has some basis in the case law of the US Supreme Court. In Sanchez-Llamas v. Oregon, for instance, the Court held that suppression or exclusion of evidence as a remedy for a violation of Article 36 VCCR was not mandated by the Convention and hence only referred to domestic law.Footnote 38
In a case concerning restitution of cultural property that was taken in wartime occupation and colonial domination, the Italian Council of State held that the obligation to return property taken in violation of the prohibition to use force and the principle of self-determination was a consequence implied in the breach of these norms.Footnote 39 While the basis of the Council of State's finding is not entirely clear,Footnote 40 the Council viewed the obligation of restitution in such circumstances as an ‘autonomous’ primary-norm principle detached from the secondary rules of reparation in the law of state responsibility. These considerations show that domestic courts often view the issue of remedies as strictly contingent on the primary norm invoked. The matter was clearly pronounced by the United Kingdom High Court in a case concerning rights of an investor (OEPC) under a bilateral investment treaty between the UK and Ecuador:
The [arbitral] tribunal was . . . dealing with the rights of OEPC in international law and the obligations that Ecuador owed to OEPC as a matter of international law. It must follow, in my view, that if the tribunal concluded that international law rights of OEPC had been violated by Ecuador, or the latter was in breach of its international law obligations, then the tribunal will have to consider what remedies are available in international law to repair any damage caused to OEPC by Ecuador's breach of OEPC's international law rights.Footnote 41
This would mean that depending on the source of the cause of action or right claimed, the remedy would follow either from international or from municipal law.
Finally, there is yet another problem that makes an assessment of the possible effects of domestic case law on the international rules of state responsibility, especially those on reparation, difficult. It must be recalled that the international rules on reparation are very general, abstract, and indeterminate, and this is certainly a consequence of the fact that the entire concept of international responsibility is but a general principle of law that has developed in municipal law. As such the individual rules on reparation necessarily are general and abstract and must be filled and concretized in the particular case. It follows that the international rules of state responsibility do not provide much guidance in questions of detail that arise in domestic court proceedings. For example, Article 36 on compensation does not answer a number of complex and contested issues, but contents itself with stating that the responsible state is obliged to ‘compensate for the damage caused’Footnote 42 by the wrongful act and that such ‘compensation shall cover any financially assessable damage including loss of profits insofar as it is established’.Footnote 43 It does not say what financially assessable damage is, notably how it is to be assessed; nor does it say how loss of profits is to be established or how it is to be determined which damage was caused by the wrongful act. These problems are only partially explained by the Commentary. As they stand, many provisions on the content of state responsibility will only serve as a starting point, and the parties involved in a dispute or the tribunal will look elsewhere for clearer guidance. Therefore, domestic courts will frequently refer to their own municipal law with much more sophisticated rules on the matter, which do not necessarily match those of international law.Footnote 44
In some cases, the situation may, however, be the reverse in that a municipal court first turns to domestic rules of reparation for an international wrong, and in addition refers to international law. Thus a Canadian court stated that ‘[t]he various sources of international human rights law declarations, covenants, conventions, judicial and quasi-judicial decisions of international tribunals, customary norms must . . . be relevant and persuasive sources for interpretation of the . . . provisions [of the Canadian Charter of Rights and Freedoms]’.Footnote 45 Similarly, the Supreme Court of Peru stated that when acts committed amounted to international crimes, domestic courts should not only apply domestic law, but also look at international-law instruments and judgments to determine the reparation due.Footnote 46
With all these caveats in mind I will now discuss some aspects of reparation and how they were addressed by domestic courts. I will do so by looking at selected issues in the context of restitution and compensation.
3.2. Restitution
Generally, the forms of reparation in international law are restitution, compensation, and satisfaction, the latter being of no relevance in domestic-court practice. To begin with, restitution is often described as the primary form of reparation, although this far from clear under current international law.Footnote 47 In any event, restitution is frequently argued in domestic courts as the appropriate remedy for an internationally wrongful act, and in many cases courts are in principle inclined to grant restitution if it concerns the factual re-establishment of the situation existing prior to the violation. In the Abdelrazik case,Footnote 48 the Canadian Federal Court held that the rights of a Canadian citizen to enter Canada were breached and the appropriate remedy was restitution. Quoting the ‘Chorzów formula’Footnote 49 the Court held that ‘the applicant [was] entitled to be put back to the place he would have been but for the breach in Montreal’.Footnote 50
However, in determining whether restitution is the appropriate remedy, much will depend on the particulars of the pending case. A quite prominent example in this respect is the position of the United States Supreme Court in Alvarez-Machain. Footnote 51 As is well known, the case concerned the abduction of a person by US authorities in breach of Mexico's territorial sovereignty and hence in violation of international law. Thus, applying the rules of state responsibility on reparation, the United States would have been obligated under international law to provide restitution of the status quo ante consisting in the return of the illegally abducted person. This was also held by the lower courtsFootnote 52 but ultimately rejected by the Supreme Court, which affirmed the jurisdiction of US courts for criminal prosecution.Footnote 53
Viewed from the perspective of international law, the main problem of this case was that the arguments were entirely confined to the applicability of the bilateral US–Mexico extradition treaty and whether the treaty prohibited abduction.Footnote 54 Unfortunately, the Court did not examine the consequences of the abduction under customary international law, which would have yielded the uncontested conclusion that the abduction was a breach and that the US would have been obliged under international law to provide for restitution.Footnote 55 The main reason why the Court did not address the situation under customary law was that this question was not argued by the parties.Footnote 56 However, nothing would have precluded the Supreme Court from applying customary international law proprio motu and from ordering the return or repatriation of Mr Alvarez-Machain to Mexico, had it only been willing to do so.
As is well known, restitution assumes a much more complicated nature if it does not concern factual changes, but modification of municipal legal acts such as laws or judgments. While not frequently being ordered by international tribunals, ‘legal restitution’ does have its place in international law.Footnote 57 However, there is an inherent limitation on this remedy, as international law cannot itself revoke or annul municipal laws, or rescind administrative or judicial measures, but is wholly dependent for this effect on domestic institutions. Legal restitution may in theory be pronounced and applied by domestic courts, especially where a provision of municipal law is incompatible with international law, in which case we most likely have a breach of international law. It is through this possibility of legal restitution that domestic courts can ‘domesticate’, so to speak, the supremacy of international law, and significantly strengthen the efficacy and effectiveness of international law.
However, there are often insurmountable obstacles that severely limit the availability of this form of restitution in domestic law. For domestic courts can apply such forms of legal restitution only if, and to the extent that, they are empowered in jurisdictional terms by municipal law to do so. Here practice is very divergent and inconsistent. Some states hold the supremacy of international law high by endowing domestic courts with broad jurisdiction to set aside domestic laws that are in conflict with international law. But this is, to be sure, the exception rather than the rule. More frequently, the decisive test will be the constitutionality of ordinary domestic laws, and constitutional courts or other courts performing powers of (quasi-)constitutional review may then rescind domestic laws if they are incompatible with constitutional norms. In such cases, the supremacy of obligations under international law will be maintained only if they have been given some special constitutional rank in domestic law and if, furthermore, the relevant domestic law in substance reflects the international norm at issue.
Another possibility is that ordinary municipal law expressly refers to international law as the relevant standard of compatibility. International law, sometimes even international ‘practice’, may thus find its way into domestic law and be subject to application by domestic courts.Footnote 58 This was for instance, the case when the Austrian Constitutional Court repealed an administrative decree which it considered to be in violation of the Treaty on the Re-Establishment of an Independent and Sovereign Austria concluded between Austria and the Allied and Associated Powers in 1955.Footnote 59 This treaty obliges Austria, inter alia, to recognize in certain Austrian regions the Slovene and Croat languages as official languages in addition to German. The relevant provision on minority protection was given constitutional rank but the problem was that it was vague and indeterminate as to its scope. In the process of implementation into domestic law, the Austrian Parliament enacted a federal law known as the ‘Ethnic Groups Act’, which itself contained specific provisions on minority protection, but also authorized the Federal Government to determine by administrative decree in detail the territorial and personal scope of the obligation of minority protection in the state legislation. This Act also contained a clause which obliged the Government, when promulgating the implementing decree, to observe existing obligations under international law. This condition eventually proved to be crucial when the matter came before the Constitutional Court, which, in the course of administrative proceedings, had to review the compatibility of the implementing decree with federal law. In practice, the minority rights applied only in towns and villages with a relatively high percentage of minority population, i.e. 25 per cent of the population. In reviewing the lawfulness of the implementation of the minority rights, the Constitutional Court invoked the reference in the federal law to existing obligations under international law. It then examined, by way of comparison with other countries,Footnote 60 international practice in the field of minority protection and determined that the permissible range required by international law was between 5 and 25 per cent and concluded that the requirement of 25 per cent was on the uppermost end of the scale. It therefore considered that the decree did not take adequate account of existing obligations under international law.Footnote 61 The Court ultimately repealed this part of the decree and thus provided legal restitution as a form of reparation in consequence of a domestic law not in conformity with international law. But this was only possible due to the express reference to international law in the implementing federal law.
In cases where domestic courts cannot repeal a municipal law they may be empowered at least to disapply it and to consider it inapplicable even though it remains formally valid and in force.Footnote 62 The result will, however, largely be the same as that of a formal repeal. Similar problems arise where it is a judgment, notably a criminal sentence, which is not in conformity with what international law requires. If it is a decision against which no further remedy such as appeal or revision is available, this may produce the undesirable result that the decision is incompatible with international law and cannot be revoked. Unless the national legislator changes the law so as to allow for revision of final judgments should they turn out to be in breach of international law – an approach increasingly taken by states parties to the European Convention on Human Rights – the only possibility of remedying the international wrong is to disapply the judgment or to discontinue the execution of a sentence.Footnote 63
A specific remedy has been increasingly applied by domestic courts for serious breaches of obligations under peremptory norms of international law. Thus the House of Lords has frequently declined to recognize the factual effects or consequences of such breaches. In Kuwait Airways Corporation v. Iraqi Airways Co., for instance, it held that with regard to the invasion of Kuwait by Iraq an English court ‘may not recognise any Iraqi decree or act which would directly or indirectly enable Iraq or Iraqi enterprises to retain the spoils or fruits of the illegal invasion’.Footnote 64 Such an approach is also taken in cases of torture. In A (FC) and Others (FC) v. Secretary of State for the Home Department, the House of Lords stated that ‘the jus cogens erga omnes [sic] nature of the prohibition of torture requires member states [of the Torture Convention] to do more than eschew the practice of torture’.Footnote 65 It concluded that the exclusion of evidence which was or may have been obtained by torture was warranted. In doing so it invoked Article 41(2) of the ILC Articles and held that ‘[t]here is reason to regard it as a duty of states . . . to reject the fruits of torture inflicted in breach of international law’.Footnote 66 In the R v. Secretary of State case, the claim that states had an obligation ‘to take steps to forestall or prevent torture wherever it occurs’Footnote 67 was subsequently dismissed. The Court then invoked Article 41(1) and said that ‘[e]ven if . . . torture or a real risk of torture were established on the evidence, that would impose no duty on the United Kingdom Government to do other than cooperate with other States to bring to an end, through lawful means, the circumstances giving rise to that situation. International law imposes no further duty on an individual State to intervene’.Footnote 68
3.3. Compensation and the principle of compound interest
I will now turn to the issue of compensation, which in practice is certainly the most important remedy in the law of state responsibility. I will limit my analysis to one aspect of compensation that has not been entirely clarified to date: the availability in international law of compound interest. Interest is usually calculated only on the initial principal amount due, and the interest rate is added thereto at specified intervals (e.g., annually). In the case of simple interest, the interest sum is not added to the principal sum for the future calculation of the amount of interest. This is the important difference to compound interest that is added to and henceforth included in the principal sum for the further calculation of interest. The question whether international law provides for simple interest only, or for compound interest as well, arose in the McKesson case, which nicely illustrates the way in which domestic courts may have an influence on the development of individual rules of international law. One aspect that renders this case so useful is that it concerned a genuinely international law issue; that is, the expropriation of foreigners. Unlike in other cases dealing with questions of reparation and the appropriate remedies, in this case the applicable law did not overlap with rules of domestic law concerning methods of valuation. Because it is so exemplary in addressing the issue of compound interest in international law, I will discuss this case in a more detailed manner.
McKesson is a long-running dispute during which a number of international-law questions surfaced in US courts. It arose out of an expropriation of the shares of a US corporation in an Iranian dairy in the course of the Islamic revolution in 1979.Footnote 69 Since the expropriation took place after the jurisdictional cut-off date of the Iran–US Claims Tribunal, which therefore had no jurisdiction over the case,Footnote 70 the corporation initiated proceedings in domestic courts in the US and claimed inter alia for prejudgment compound interest as a consequence of the (unlawful) taking. The plaintiff relied on the bilateral Treaty of Amity and interpreted the terms ‘just compensation’ and ‘full equivalent’ so as to require the payment of compound interest in case of expropriation. The US District Court for the District of Columbia, however, rejected this claim, holding that general international law required simple interest only, meaning that compound interest was excluded and not allowable.Footnote 71 The District Court analysed the matter in quite some detail, discussing the various sources and authorities relied upon by either party. As the main source for its decision it invoked Marjorie Whiteman's monograph on damages, which states in a sweeping manner that ‘[t]here are few rules within the scope of the subject of damages in international law that are better settled than the one that compound interest is not allowable’.Footnote 72 In addition, the court based its decision on to the constant case law of the Iran–US Claims Tribunal rejecting any award of compound interest.Footnote 73 On the other hand, it denied that the few cases which already at the time had awarded compound interest provided any significant evidence of a customary character.Footnote 74 Finally, the court also took note of the work of the ILC on state responsibility and the draft articles adopted on first reading.Footnote 75
The position of the District Court clearly reflects the traditional view that is largely based on state-to-state arbitration, where claims for compound interest were regularly rejected in the past. An often quotedFootnote 76 example to this effect is the Norwegian Shipowners case, in which the tribunal rejected the claim for compound interest as follows:
The claimants have asked for compound interest with half-year adjustments, but compound interest has not been granted in previous arbitration cases, and the Tribunal is of the opinion that the claimants have not advanced sufficient reasons why an award of compound interest, in this case, should be made.Footnote 77
While this case is not as clear as it might seem,Footnote 78 and while there are also early cases in which international tribunals have in fact awarded compound interest,Footnote 79 in the majority of cases, tribunals have indeed rejected claims for compound interest. This has, for example, been the constant case law of the Iran–US Claims Tribunal, as was emphasized by the district court in McKesson.Footnote 80
A look at the ILC Articles reveals that compound interest seems not to be an issue as the Articles do not mention them either as a distinct remedy or even as an aspect of interest. Article 38 concerning interest only deals with simple interest. It is only in the commentary that one finds some indication as to the question of compound interest, and the ILC seems to have incorporated a dismissive attitude in interpreting international case law: ‘The general view of courts and tribunals has been against the award of compound interest’,Footnote 81 and further: ‘[G]iven the present state of international law it cannot be said that an injured State has any entitlement to compound interest, in the absence of special circumstances which justify some element of compounding as an aspect of full reparation’.Footnote 82 Thus the general rule under the ILC Articles is to award simple interest and any award of compound interest is the exception thereto and must be justified by ‘special circumstances’. However, the preference of the simple-interest rule and the general rejection of compound interest have come under severe criticism in doctrine.Footnote 83 More importantly, the situation seems to have changed in recent years, mainly subsequent to the adoption of the ILC Articles and essentially under the influence of investment tribunals,Footnote 84 and tribunals apparently are more inclined today to award compound interest in order to provide full reparation, or at least to ensure that the wrongful party is not unjustly enriched at the expense of the injured party.
These considerations were taken up by the court of appeals in the further proceedings in McKesson v. Iran. The Court of Appeals dismissed both the approach taken by plaintiff and that by the District Court. On the one hand, it said that it could not be deduced from the Treaty of Amity that it provided for compound interest as the terms used were too vague; on the other hand, it held that plaintiff made ‘a convincing case that contemporary international law does not, as the district court seems to have thought, require simple interest’.Footnote 85 The Court denied the authority given by the District Court to Whiteman's digest which had assessed the state of international law ‘over fifty years ago’.Footnote 86 It also took account of the few cases that in fact had awarded compound interest and that were discarded by the District Court,Footnote 87 thus putting the ‘negative’ practice of the Iran–US Claims Tribunal into more contemporary perspective. It then looked at international case law as well as the work of the ILC and quoted from Special Rapporteur Crawford's third report.Footnote 88 In assessing all these authorities, the court accurately summarized the current state of international law as follows: ‘although customary international law may favor awards of simple interest, we think the district court erred in holding that it requires such awards’.Footnote 89
This aspect of the lengthy proceedings in the McKesson dispute is indeed remarkable in a number of respects. First, both the District Court and the Court of Appeals analysed practice and scholarly writings on the issue in quite some depth, at least to an extent that might well serve as an example for other domestic courts facing similarly unclear questions of international law. It is also interesting to see how a domestic court may anticipate the course of development of a specific rule of international law in and through international arbitration. Furthermore, it is certainly an irony of history that McKesson, a case that only marginally slipped through the temporal jurisdiction of the Iran–US Claims Tribunal, in a way contrasted, or even thwarted, the Tribunal's consistent practice to deny the award of compound interest. Finally, it is noteworthy to recall that one reason why international tribunals have preferred simple over compound interest might have been that they have been influenced in this area by domestic laws and judicial decisions which have traditionally allowed only simple interest on sums due under contract, by law, or – in common-law jurisdictions – court judgment.Footnote 90 As Mann pointed out, in a number of jurisdictions the relevant laws did not authorize the payment of compound interest, albeit they did not expressly prohibit them.Footnote 91 This is but one aspect of the general theme identified at the beginning that the rules of international responsibility largely draw on municipal-law analogies. Against this background it is fascinating to see how a domestic court may influence, or at least confirm, the reversal of international-law principles that have originally developed in domestic law. In sum, the Court of Appeals nicely showed the potential of domestic courts in clarifying, but also further developing, rules of international law in the field of reparation that are either controversial or indeterminate, or even both.
4. Aspects of implementation: the issue of standing
Finally I will turn to the implementation of state responsibility, and I will confine myself to the issue of standing as questions of countermeasures are generally not addressed by domestic courts. The question whether individuals enjoy standing to invoke rules of state responsibility in domestic proceedings is a matter mainly, often exclusively, governed by municipal law. The rules of general international law on standing provide inadequate guidance, if any, to domestic courts. Furthermore, the question of standing under international law is rarely a matter raised in domestic proceedings, and if it is, it is invariably bound up with that of judicial enforcement and the issue of self-execution of international treaty norms.Footnote 92 Thus in the McKesson case just discussed, both the District Court and the Court of Appeals answered the question whether the Treaty of Amity, Economic Relations, and Consular Rights between Iran and the United States created property rights for individuals in the affirmative, at least to the extent the terms of the relevant treaty provision are self-executing. The Court of Appeals initially confirmed the District Court's findings that ‘[i]f a treaty contains language clearly indicating its status as self executing, courts regard that language as conclusive’.Footnote 93 The self-executing character of treaties may be deduced if they ‘speak in terms of individual rights’.Footnote 94 The court then applied this reasoning to the case at hand: ‘The Treaty of Amity contains just such language: It explicitly creates property rights for foreign nationals . . . and contemplates judicial enforcement of those rights’.Footnote 95 What the court did not say, but obviously assumed (and rightly so), was that the self-executing character of the provision must be examined from the perspective of international, not domestic, law.Footnote 96
This approach is perfectly in line with what the ICJ said in LaGrand when it interpreted the ordinary meaning of the terms of Article 36(1)(b) and (c) in their context. The Court held that ‘[t]he clarity of these provisions, viewed in their context, admits of no doubt’,Footnote 97 and further: ‘Based on the text of these provisions, the Court concludes that Article 36, paragraph 1, creates individual rights’.Footnote 98 Similarly, in Jogi v. Voges and Others, a US Court of Appeals, after an in-depth analysis of the terms of the Vienna Convention on Consular Relations, not only stated that Article 36 was self-executing,Footnote 99 but also that it ‘grants private rights to an identifiable class of persons . . . and that its text is phrased in terms of the persons benefitted’.Footnote 100 The court concluded by holding that these individual rights were also ‘presumptively enforceable’ under domestic law, thus granting individuals standing to pursue their rights in domestic courts.Footnote 101
Oddly, however, in the further proceedings in McKesson, the Court of Appeal reviewed the previous decision de novo and reversed it.Footnote 102 In a chain of arguments the Court started by invoking Alvarez-Machain, where the Supreme Court stated the obvious when holding that ‘[i]n construing a treaty, . . . we first look to its terms to determine its meaning’.Footnote 103 It then said that the bilateral Treaty of Amity, which was the source of the alleged individual rights, like other treaties of its kind, was self-executing. This, however, did not end the court's search for a treaty-based action because ‘[w]hether a treaty is self-executing is a question distinct from whether the treaty creates private rights or remedies’.Footnote 104 This is no doubt correct, as is the distinction drawn between treaties that only benefit individuals and those genuinely creating enforceable private rights of individuals,Footnote 105 a distinction probably based on the mediatization of the individual in international law (i.e. the concept of diplomatic protection), as distinct from the entitlement of the individual as holder of rights directly under international law (i.e. mainly human rights).
Unfortunately, however, the Court of Appeals approached the matter in a quite different and, it is submitted, flawed manner. For in determining whether the treaty provided for a cause of action, it admitted that the treaty contained substantive rights of individuals, but focused exclusively on the question of enforceability of these rights. In reality, it distinguished between a treaty that only sets forth substantive rules of conduct and specific consequences in case of breach of these rules (e.g. compensation), and a treaty that also creates ‘private rights of action for foreign corporations to recover compensation from foreign states in United States courts’.Footnote 106 As an example of the latter kind of treaty, the Court mentioned the Warsaw Liability Convention.Footnote 107 Yet it goes without saying that an international treaty on civil liability invariably confers standing on the beneficiaries of its rules in domestic courts, but the entire argument of the Court of Appeal builds on the erroneous assumption that such standing is not granted unless the pertinent treaty contains express provisions on enforceability in domestic courts.Footnote 108 But it is submitted that what really counts are the structure of performance and the characteristics of the obligations of the treaty rather than the question whether it provides for distinct rules on enforceability. Thus what is decisive is the nature and character of the treaty rules; that is, whether they are directed, in the first place, to states by prescribing state-to-state conduct in relation towards individuals, which would make individuals ‘only’ beneficiaries of the relevant rules and denies them any right of direct action, or, conversely, whether they are primarily aimed at producing legal rights of individuals, rendering them ‘true holders’ of rights and obligations under international law, even if the formal source of this status is an ‘ordinary’ inter-state obligation.Footnote 109 It is mostly with regard to these ‘inward-looking’ rules that one will find a clue as to the standing of individuals in domestic courts arising out of an international treaty or, for that matter, out of a rule or norm of general international law.
A similar approach to the question of standing of individuals under an international treaty is also taken by other courts. Many of the few domestic cases concern claims for compensation against states for violation of international rules on armed conflict. In view of the interdependence between standing and the relevant substantive rules, the whole matter resists generalization. Thus, the Austrian Supreme Court had to decide the enforceability by individuals of provisions of the 1955 State Treaty already referred to earlier. In that treaty, Austria renounced any claim to reparation that Austria, or its nationals, would have had under general international law against the Allied and Associated Powers, inter alia arising out of damage sustained as a consequence of acts of armed forces of the Allied Powers. In turn Austria obliged itself to compensate private individuals at least for noncombat damage they suffered by Allied forces on Austrian territory in violation of international law. In civil-law proceedings under this provision, the question arose whether individuals had standing in order to enforce this treaty provision. After interpreting the relevant terms according to their ordinary meaning in their context, particularly in relation to other provisions of the Treaty with a similar content, the Supreme Court without hesitation answered this question in the affirmative. It held that the wording and the purpose of the compensation provision were sufficiently clear, meaning that the compensation obligation did not require implementing legislation and hence was self-executing.Footnote 110 Individuals thus were to be considered entitled to enforce these compensation rights granted by an international treaty and for that purpose they enjoyed standing in Austrian courts. In the same year, the Supreme Court of Slovenia came to precisely the same conclusion with regard to this provision of the Austrian State Treaty.Footnote 111
In contrast, the German Federal Court of Justice, faced with the question whether individuals could raise in German courts claims against Germany arising from violations of international humanitarian law, looked at the structure of performance of the relevant norms invoked by claimants. The Court admitted that while Article 3 of the IV Hague Convention formerly was considered to have an exclusively inter-state character, the individual has no doubt obtained the status as a holder of rights in international law, albeit a limited one. However, without prejudice to other fields of international law, this change in international humanitarian law does not extend to the ‘secondary rights’ of individuals. In other words, even if the individual enjoys limited legal personality under international law with respect to specific substantive rights, this development has not brought about any entitlement to claim reparation, particularly damages, as well.Footnote 112 The Court analysed this question also in relation to Article 91 of Addition Protocol I of 1977 and reached the same conclusion, the more so as this provision was but an extension of Article 3 of the Hague Convention to the Geneva Conventions and thus essentially the same as to its structure and nature.Footnote 113 The inter-state character of these norms and, more importantly, the obligation to compensation in the event of their breach, was also the relevant factor for the Italian Court of Cassation to assess the standing of private claimants in Italian courts. Like the German Federal Supreme Court, the Court of Cassation interpreted Article 91 as merely laying down rules of international law that ‘govern relations between States’ and not between states and individuals.Footnote 114 The resulting gap in the protection by law through lack of enforceability may no doubt be regretted, but these judicial pronouncements of domestic courts seem to be in line with international practice and international law as it still stands today.Footnote 115
This short survey of case law is, of course, not representative, neither as regards the sample of the countries or the number of decisions selected, nor as to the issues analysed. It is, however, interesting to note that in addressing the question as to standing of individuals under international law, the courts in these cases made several important assumptions and distinctions that may well indicate a generally consistent approach. In the first place, the main criterion which determines the character of the relevant rule of international law as being capable of granting standing to individuals regularly is the ‘direction’ in which it is intended to operate. Accordingly, where a norm is aimed at regulating state conduct in strictly inter-state relations, individuals are generally denied standing in domestic courts.
Second, in the cases discussed the courts assessed the question of standing under international law against the background of the conferment of substantive rights. This approach is similar, if not identical, to that of the ICJ in its famous statement in South West Africa where it said that standing requires ‘the existence of a legal right or interest in the subject-matter of [the] claim’.Footnote 116 It is certainly in this sense that the US courts in McKesson analysed whether the Treaty of Amity provided for a ‘cause of action’ of the individual against the state,Footnote 117 that the German Federal Supreme Court examined whether individuals had a ‘right to sue’Footnote 118 under international humanitarian law,Footnote 119 that the Italian Court of Cassation considered whether the relevant rule invoked ‘permit[ted] injured persons to seek reparation for the damage done to them’,Footnote 120 and that the Austrian Supreme Court scrutinized whether the international treaty at issue provided for a ‘direct basis of a claim of compensation’.Footnote 121
Third, the courts generally asked whether the international treaty, or the particular provision invoked, was self-executing and in doing so they looked at the terms of the provision in order to determine its meaning and effect. This conforms to international law, especially as it mirrors the general rule of interpretation of Article 31 of the Vienna Convention on the Law of Treaties, even though this is but a modest finding. Yet it shows a considerable degree of convergence of domestic courts when interpreting international rules to determine whether they have a self-executing character or not.
Fourth, particularly the German Federal Supreme Court distinguished the entitlement to a substantive right directly under international law from questions of enforcement under both international and domestic law. On this basis, the question whether international law entitles individuals to actually enforce their rights in judicial proceedings, either in international or in domestic courts or tribunals, is without prejudice to the existence of the substantive right. In this respect the decision of the US Court of Appeals in McKesson made the entitlement of the individual under international law, and with it the standing in domestic courts, dependent on whether the international norm itself granted express or specific enforceability.
Finally, a basic distinction is made between the original or ‘primary’ right to which individuals are entitled, for example Article 51 of Additional Protocol I in the context of international humanitarian law, and the ‘secondary’ right in case of breach of this primary right, such as that to damages or compensation pursuant to Article 91 of Additional Protocol I. This distinction was clearly considered by the German Federal Supreme Court as entailing the important consequence that the right to compensation for prior violations of international law against foreign nationals is generally still an exclusive one of the latters’ home state.Footnote 122
5. Concluding remarks
Now where does all that leave us with regard to the content and implementation of international responsibility? Given the brevity of the foregoing analysis, the conclusions must remain general, abstract, and perhaps self-evident. Generally, practice shows that domestic courts may only play a limited role in developing the international law of state responsibility. This has partly to do with the quite limited number of cases and the overall scarce practice of domestic courts. Another reason is that the practice of domestic courts is quite disparate, reducing their value in generating consistent practice. Furthermore, there is a general inclination of domestic courts to apply remedies under municipal rather than international law, which limits their significance as agents of international law.
It is only in exceptional cases that domestic courts may really contribute to clarifying controversial norms of international law and support the further development of international law, especially where the status of existing law is far from clear – on condition, of course, that the relevant practice of domestic courts is consistent and uniform. In particular, the court in the McKesson case has pronounced on the availability of compound interest at a moment when this was still a highly contentious issue, even if it has ‘only’ strengthened a trend already looming on the horizon of international practice. The clarifying function alone is no mean feat, given the fact that the rules of reparation as contained in the ILC Articles are relatively vague and indeterminate. But clarifying the law is not an end in itself but may, and usually does, also foster the legal certainty of the law applied. In this respect domestic courts may also take on the task of fine-tuning international norms and adapt them to the needs of the individual case and its specific constellation as well as the particulars of the domestic legal system. Finally, viewed from the perspective of international law, probably the most important role domestic courts may play in applying secondary rules of state responsibility’ is that of strengthening the effectiveness of the international legal system and its individual rules. While this holds true for any area of international law, it assumes a special quality in the law of state responsibility, which in itself is an important benchmark for measuring the effective compliance with, and implementation of, international law.
