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COMPENSATION, DAMAGE pecuniary compensation is usually an appropriate and often

the only remedy for injury caused by an unlawful act. Under ARSIWA Article 36 whenever
not possible compensation becomes the standard consequence for injury,covering any
financially assessable damage including loss of profits'. This is consistent with the longstanding jurisprudence of international courts, tribunals, and claims comissions. In its
judgment in Gabelkovo-Nagyrnaros Project, the Court reaffirmed the well-established rule of
international law that an injured State is entitled to obtain its compensation from the State
which has committed an internationally wrongful.. for the damage caused by it'? Applying
compensation is straightforward enough in the case of material damage,. whether to a state or
to its nationals. Starting with the commissions under the 1794 Jay treaty,claims comission
and arbitratal tribunals have been established by treaty to
rule on claims and determine the extent of damages following situations of conflict Although
the International Court has seldom awarded damages,31 their jurisprudence has served as a
basis both for lump sum agreements32 and for awards by other international bodies, such as
the Iran-US Claims Tribunal,33 the UN Compensation Commission,34 and the Eritrea-Ethiopia
Claims Commission.35 The burgeoning jurisprudence of investment tribunals deals almost
exclusively with claims for pecuniary compensation.36
When it comes to quantifying damages, international tribunals face the same problems as
other tribunals as regards indirect damage and deal with the issues in much the same way.37
The particular context of and the mode of breach, may determine the approach to damages.38
While problems of causation may present particular theoretical difficulties,39 ARSIWA
pragmatically avoids the issue, leaving specific determinations to the particularities of each
case. This is consistent with the practice, for, even if tribunals are often obscure in this
respect, there is a close connection between remoteness and measure of damages, on the
one hand, and substantive rules on the other.
One nonetheless finds important similarities in the reasoning of adjudicators. In LG&E v
Argentina, an ICSID Tribunal considered that the appropriate amountf damages, given the
economic collapse that affected all assets in the country, was that of which Argentinas
conduct was the proximate cause.40 The same standard was used by the Eritrea-Ethiopia
Claims Commission when deciding which damages to consider as connected with the violation
of ius ad bellum by Eritrea. While observing that other criteria (any direct injury and damage
reasonably foreseeable) had been used in the past,41 the Commission noted that if:

a State initiating a conflict through a breach of the jus ad bellum is liable under international
law for a wide range of ensuing consequences, the initiating State will bear extensive liability
whether
or not its actions respect the jus in bello... Imposing extensive liability for conduct |does
not violate the jus in bello risks eroding the weight and authority of that law and
Ejacentive to comply with it, to the injury of those it aims to protect.42
Bp tribunals seem to have had in mind the need to adjust the amount of compensaton in
such a way that it fits the wrongful conduct. Outside of the few cases of objec- lability,4' it
may be that the rule is simply that if harm is caused by wrongful or negligent conduct,
whether or not in the course of lawful activity, then compensation is payable. The scale of
compensation in cases of lawful activity may be less ambitious that applicable to activity
unlawful at birth, such as unprovoked attach or unlawful expropriations. In SD Myers, Inc
v Canada, the tribunal went to great pains to identify| the proport ion of the losses suffered
by the claimant which were in fact connectted with the period in which Canada was in
breach of its NAFTA obligations.44 There is some debate as to the possibility of punitive*
or penal damages in international law The problem concerns in part the granting of
compensation for breach of legal duties without actual damage, for example by unlawful but
temporary intrusion the territory or airspace of another state. The award of compensation in
such cases is sometimes described as 'penal damages, but this is incorrect: their
characterisation by the ILC as moral damages is more accurate.47 Fitzmaurice expressed the
view, that any breach of treaty entails the payment ofsome damages... irrespective Whether
the breach has caused any actual material damage or pecuniary loss.48 However, tribunals are
cautious in approaching cases of non-material loss, and there is no simple solution to the
problem of valuation of such losses.
In Janes the US presented a claim based on a failure by Mexico to take adequate steps I
apprehend the murderer of an American citizen.49 The award approached compensation in
terms of the damage caused to the individuals concerned rather than to the US and gave
compensation to the relatives of Janes for the4 indignity caused by the non-punishment of the
criminal.31 However, the US was only claiming 'on behalf of Janesdependants, and the only
concern of the Claims Commission was one of valuation rather than ascription. Although the
practice of awarding 'nominal' or token damages was once common,u violations of national
honour or dignity will nowadays often be dealt with by satisfaction, agreed with the
responsible state or awarded by tribunal in the form of a declaratory judgment.53

(C) SATISFACTION54 (i) The role ofsatisfaction

Satisfaction may be defined as any measure which the responsible state is bound to take
under customary law or under an agreement by the parties to a dispute, apart from restitution
or compensation. Satisfaction is an aspect of reparation in the broad sense. However, it is not
easy to distinguish between pecuniary satisfaction and compensation in the case of breaches
of duty not resulting in death, personal injuries, or damage to or loss of property. Claims of
this sort are commonly expressed as a claim for an indemnity, which may create confusion.
If there is a distinction between this and a claim for compensation, it would seem to be in the
intention behind the demand. If it is predominantly that of seeking a token of regret and
acknowledgement of wrongdoing then it is a matter of satisfaction.
Satisfaction may take many forms, which may be cumulative: apologies or other
acknowledgement of wrongdoing by means of a payment of an indemnity or a (somewhat
outmoded) salute to the flag; the trial and punishment of the individuals concerned, or the
taking of measures to prevent a recurrence of the harm. In the Im Alone the Canadian
government complained of the sinking on the high seas of a liquorsmuggling vessel of
Canadian registration by a US coastguard vessel, as the climax to a hot pursuit which
commenced outside US territorial waters but within the inspection zone provided for in the
Liquor Treaty* between Great Britain and the US.55 The Canadian claim was referred to
Commissioners who reported that the ship although a British ship of Canadian registry, was
de facto owned, controlled, and at the critical times, managed.. .by a group of persons acting
in concert who were entirely, or nearly so, citizens of the United States, and who employed
her for the purposes mentioned [i.e. smuggling alcohol]... [I]n view of the facts, no
compensation ought to be paid in respect of the loss of the ship or the cargo.56 However the
sinking having been unlawful, the Commissioners recommended that the States ought
formally to acknowledge its illegality, and to apologize to His Canadian Government
therefor; and, further, that as a material amend in respect of the wrong the United States
should pay the sum of $25,000 to His Majesty's Canadian government..

This approach was taken up by the Secretary-General in his ruling on the Rainbow Warrior
affair. The vessel destroyed belonged to Greenpeace, a Dutch NGO, but its destruction by
French agents in the port of Auckland was a violation of New Zealand's Soveriegnty. Besides

ordering compensation, the Secretary-General ruled 'that the Minister of France should
convey to the Prime Minister of New Zealand a formal and unqualified apology for the
attack, contrary to international law, on the Rainbow Warrior by French service agents*.58
New Zealand also demanded that the two agents responsible, who had been imprisoned after
trial in New Zealand, be kept in castody if returned to France. The Secretary-General ruled
that these agents should transferred to a French military facility on an isolated island outside
of Europe for a period of three years ... [and] prohibited from leaving the island for any
reason,exceptthe mutual consent of the two Governments'

These various modalities of satisfaction continue to he used in modern state practice and this
is reflected in ARSIWA Article 37 and its commentary.

A number of ancillary questions remain. It is sometimes suggested that an honour of a state


or intention to harm are preconditions for a demand satisfaction but this is very doubtful.
Such elements may enter into the assessment of compensation as also may the failure to
undertake measures to prevent a recurence of harm or to punish those responsible. Measures
demanded by way of apotogy should take forms which are not humiliating and excessive.*'
Ihere is no evidence of a rule that satisfaction is alternative to and, on being given, exclusive
of t right to compensation for the breach (parties to a dispute may, of course, agree otherwise.
Declaratory judgments*1

In somecases a declaration by a court as to the illegality of the act oi the defendant state
constitutes a measure of satisfaction (or reparation in the broad sense.However,tribunals may
give a declaratory judgement n cases where this is a appropriate and constructive method of
dealing with a dispute and object is not primarily to give satisfaction* for a wrong
received.62 While the I nternationaJ Court unwilling to deal with hypothetical issues and
questions formulated in the abstract,the Permanent Court already established the practice of
giving declaratory judgment and in some cases, for example those concerning title to
territory, it found it appropriate to give a declaratory rather than an executory form to the
judgment.M The applicant states in South West Africa were seeking a declaration that certain
legislation affecting the territory was contrary to the obligations of South Africa under the

Mandate.*!* the US Diplomatic and Consular Staff in Tehran, the Courts judgment included
sev-eral declaratory prescriptions concerning the termination of the unlawful detention of the
persons concerned.66 In Nicaragua the judgment contained an injunctive declaration that the
United States is under a duty immediately to cease and refrain from all such acts as may
constitute breaches of the foregoing legal obligations.67

Sometimes it is difficult to separate neatly satisfaction through declaratory judgments from


the Courts regular adjudicative function. In Corfu Channel the International Court declared
that the mine-sweeping operation by the Royal Navy in Albanias territorial waters was a
violation of sovereignty, and then stated: [t]his declation is in itself appropriate satisfaction.
in spite of the terminology, this is not instance of satisfaction in the usual meaning of the
word: the declaration is that of a court and not a party, and is alternative to compensation.

In Corfu Channel, no pecuniary compensation had been asked for by Albania, and a judicial
declaration was therefore the only means of giving an effective decision on tin aspect of the
matter.69 But in M/V Saiga (No 2), compensation was effectively sought -Saint Vincent and
the Grenadines claimed damages not only for injury to the vessel flying its flag and its crew,
but also for breach of its rights as the flag state. The tribunal however, preferred to award
damages for the former injuries, while considering that for the latter the declaration of
illegality constituted adequate reparation.70

This was also the approach taken by the Rainbow Warrior tribunal. New Zealand argued that
the appropriate reparation for the release of the two agents responsible for the bombing of the
Rainbow Warriora breach by France of the 1986 Ruling of the Secretary-Generalwas to
return the two agents to custody. While considering that France had indeed violated its
commitments, the tribunal merely

dedarefd] that the condemnation of the French Republic for its breaches of its treaty
obligations to New Zealand, made public by the decision of the Tribunal, constitutes in the

circumstances appropriate satisfaction for the legal and moral damage caused to New Zealand
. .n

fat Genocide (Bosnia and Herzegovina v Serbia and Montenegro), three findings of violations
were considered to constitute appropriate satisfaction to Bosnia and Herzegovina, since the
case [was] not one in which an order for payment of compensation or... a direction to provide
assurances and guarantees of non-repetition, II be appropriated In these cases, the declaratory
judgment would seem to be a way fortheCourt to provide to the injured party a form of
satisfaction which does not depend on any action by the violator, when another type of
reparation could risk reigniting or aggravating a conflict.
(D) interest

I whenever compensation for a violation is due, the question arises whether interest I should
be paid, at what rate, and from which date. This is particularly relevant in [ cases where
compensation is determined by adjudication, since exhausting local rem-\ edies, going
through the adjudication process and obtaining the compensation may ale considerable time.
The right to award interest as part of compensation has been [; assumed by international
tribunals in early decisions,74 although in many cases interest was refused in the
circumstances of the case.75 More recent tribunals have been more willing to award interest
including compound interest.76 [ Rates vary widely: sometimes a rate is agreed upon by
contract or treaty, at other times tribunals will apply private international law rules and select
a national rate; other options include applying general principles of international law or
simply principles of fairness and reasonableness.77 As for the date from which interest starts
running, tribunals are not consistent either: it maybe the date when the obligation became die
and owing, the date of the violation or the date damages are awarded. Again, such depends on
the circumstances: tribunals will often try to find a formula that is not excessively punitive
although thereby running the risk of under-compensation and of rewarding delay in
payment.78
(e) serious breaches of peremptory norms: arsiwa ARTICLES 40 AND 41

Although international rules may cover any topic, not all rules have the same salience. The
debate on a hierarchy of norms is vast,79 but few today would question the notion of
obligations erga omnes. The International Court has noted that the obligations relating to the
prevention and punishment of genocide,80 requiring respect for the right to selfdetermination,81 as well as relevant obligations determined by international humanitarian
law,82 constitute obligations of this kind. Likewise, peremptory norms have been a
component of the international legal system since the 1969 Vienna Convention on the Law of
Treaties (VCLT)*3 (although the International Court only who dared to speak their name for
the first time in 2006).84 The existence of this superior normative rank entails the question of
whether violations of these rules, and especially gross violations of particularly important
rules, warrant a different regime of responsibility than that which corresponds to other
internationally wrongful acts. This was answered in the affirmative in the 1976 version of the
Draft Articles on State Responsibility adopted by the ILC following the proposals of Special
Rapporteur Roberto Ago. Its Article 19(2) provided that the breach of an obligation so
essential for the protection of fundamental interests of the international community should be
considered to constitute an international crime.85

Ago never proposed any consequences to the aggravated responsibility regime, and l it is not
even clear that all crimes of state would in his view have entailed a single, uni-I form set of
consequences.86 His initial statement on the issue of the aggravated regime B was as follows:
the responsibility flowing from the breach of those [erga omnes] obligations is entailed not
only with regard to the State that has been the direct victim of nhe breach... it is also entailed
with regard to all other members of the international Community.87 This is certainly
relevant to assess entitlement to invoke responsibility and has been retained in ARSIWA in
the form of Article 48; but problem appear regarding the precise object of this responsibility.

| Ihe notion that violations of these obligations would constitute crimes of state for a long
time generated heated debate, both within the ILC88 and in the literal before being
pragmatically abandoned by the Special Rapporteur in favour ot notion of serious breaches of
obligations under peremptory norms of general international law.90 The commentary quotes
the 1946 International Military Tribunal, which affirmed that crimes against international
law are committed by men, not by abstract entites?1 For all the symbolic overtones lost in

this change of terminology, it has settled the issue to which norms the special regime applies:
they are the same as these accorded peremptory status under VCLT Articles 53 and 64.92 On
closer examination, ARSIWA Articles 40 and 41 provide not so much a regime of aggravated
consequences as one of additional consequences. These affect in particular the legal status of
situations deriving from the wrongfulness. ARSIWA Article I provides three such
consequences. First, all states are to co-operate through lawful means to bring an end to the
violation. Second, all states must refrain from recognizing
Lawful the situation the situation created thereby. Third, no state may aid or assist the wrong
fa is maintaining the unlawful situation. No punishment of the state responsible forthegrave
breaches is envisaged by the Articles.

Other consequences remain de lege ferenda, and have seen only sparse practice a proposed
reaction to particularly grave breaches, following the lead of Special Rapporteur ArangioRuiz, is the possibility of the award of punitive damages, But | iskfrom clear that the concept
has any place in international law, and the case law certainly does not warrant a general
conclusion that it does.94 In the face of grave breches in the fields of human rights and armed
conflict, courts and tribunals have refued to award penal damages. The Inter-American Court
has held that although | see domestic courts... award damages in amounts meant to deter or to
serve as example, this principle is not applicable in international law at this time7* The !
European Court of Human Rights often observes that it does not award aggravated or
punitive damages.96 The Eritrea-Ethiopia Claims Commission reduced the potential

damages it could have awarded for the violation of ius ad bellum by Eritrea, arguing that the
Parties' limited economic capacity is relevant in determining damages claims', and explaining
that [compensation has a limited role which is remedial, not punitive'.97 The consequences

that flow from particularly grave violations are thus not qualitatively different from those that
flow from a breach of any customary or conventional rule. The distinctive regime of
responsibility that exists for grave violations does not affect reparation, but finds its main
effects in the possibilities open to non-injured states of demanding cessation and responding
to illegality.