1. Judgment of March 21st, 1959: I.C.J. Reports 1959, p. 6.Google Scholar The Judgment itself comprises 25 pages, the individual and dissenting opinions together 95 pages.

2. Pursuant to Article I, the Swiss Compensation Office shall (1) continue and complete its investigations into property of any kind in Switzerland belonging to or controlled by Germans in Germany and liquidate such property, and (4) perform these functions in close collaboration with a Joint Commission composed of representatives of each of the three Allied Governments (U.S.A., United Kingdom and France) and of the Swiss Government. Pursuant to that same Article I (4), the Joint Commission and all private persons interested shall have a right of appeal against any decision of the Swiss Compensation Office. The procedures to be followed are set out in more detail in seven Annexes, No. III of which lays down that, if the Joint Commission disagrees with the Swiss Compensation Office or if the interested individual so desires, the controversy shall be submitted within a month to a Swiss Authority of Review, whose decision shall be final, unless one of the Allied Governments, again within a month's delay, should demand further submissal of the controversy to a three members' Arbitral Tribunal, in which case the latter's award shall be final.

3. Apart from this undertaking there is in force between the United States and the Swiss Confederation a treaty of arbitration and conciliation dated February 16th, 1931.

4. In this (second) decision the Supreme Court points out that “on remand, the District Court possesses wide discretion to proceed in whatever manner it deems most effective. It may desire to afford the Government additional opportunity to challenge petitioner's good faith. It may wish to explore plans looking towards fuller compliance. Or it may decide to commence at once trial on the merits. We decide only that on this record dismissal of the complaint with prejudice was not justified”.

5. The scope of the Swiss Application of October 1st, 1957, however, was considerably wider since it asked that the Court should adjudge and declare (1) that the United States Government is under an obligation to restore the assets of the Interhandel to that company, and (2) in the alternative, that the dispute is one which is fit for submission for judicial settlement, arbitration or conciliation, demands that were further elaborated, in the Swiss Memorial of March 3rd, 1958, into a set of two Principal and four Alternative Submissions. The latter Submissions were in their turn replaced by a yet more elaborate set of Submissions A-D of November 3rd, 1958 (see further in the text).

6. Viz. pursuant to paragraph (b) of the Conditions attached to the acceptance of the jurisdiction of the Court by the United States of America: “Provided further that this declaration (of acceptance) shall not apply to:…(b) Disputes with regard to matters which are essentially within the domestic jurisdiction of the United States of America as determined by the United States of America. Practically the full text of the American declaration of acceptance was reproduced on p. 380 of the Special Issue (July 1959) of this Tijdschrift (Vol. VI).Google Scholar

7. As was in particular stressed by Judge Basdevant, who “considered that, in order to assess the validity of the Objections advanced, he should direct his attention to the subject of the dispute and not to any particular claim put forward in connection with the dispute. The subject of the dispute and the subject of the claim are explicity differentiated in Article 32, para 2, of the Rules of Court” (p. 30). But even on that basis the French Judge agreed with the Russian Judge in placing the dispute at a date even posterior to July 28th, 1948.

8. As was in particular contested by Judge Spender in whose opinion “it is not permissible to treat (the first) Objection as divisible into two parts corresponding to the principal and alternative submissions or claims as if there were two separate disputes, the first, one in which the Government of Switzerland espouses the cause of its national, the second, one in which she claims relief in an independent capacity. To do so leads to error. Such an approach to this Objection mistakes form for substance… It disregards, in my view, the essential unity of the dispute in this case… It focuses attention on the submissions or claims for relief rather than on the dispute itself” (p. 72).

9. Other divisions might likewise have been possible: one dispute relating to the espousal by the Swiss Government of the claim of one of its nationals, the other concerning the violation by the United States of direct treaty rights of the Swiss Confederation,—or: one regarding Swiss assets in the United States, the other German assets in Switzerland.

10. In particular, the Order of June 27th, 1936, in the Losinger & Co. Case, in which the Permanent Court of International Justice held that an objection based on the local remedies rule is an objection to the admissibility of the Application, and that the Court will have to adjudicate upon that question if it should assume jurisdiction (Publications P.C.I. J., series A/B, No. 67, p. 23–24Google Scholar).—On the whole, there is much to be said in favour of the proposition formulated by Judge Sir Percy Spender in another context (the meaning to be given to the word “disputes” appearing in a declaration of acceptance which must be co-terminous with the same word in Article 36 of the Statute): “A State submitting to the jurisdiction of the Court is entitled to place reliance upon the judicial pronouncements of this Court and its predecessor” (p. 60).

11. Judge Basdevant evidently felt somewhat “gêné” by this lack of logic: “As the anticipated effect of a Judgment on a preliminary objection is to determine wether the proceedings on the merits will or will not be resumed, he might have agreed that the Court should confine itself to adjudicating on the Third Objection which it has upheld” (p. 31). This implies that the former President saw no objections against the Court's dealing with the controversy concerning the admissibility or inadmissibility of a claim prior to its pronouncement on its jurisdiction to deal with that particular controversy: “As the Application is declared to be inadmissible this puts an end to the proceedings and all the other questions that were connected with them no longer arise” (p. 31). This reasoning can, of course, only apply to a negative finding of the Court. Should the Court have held the claim admissible, then it would have been forced to return to the dispute concerning its competence and to give this dispute precedence.

12. As though the Court could, on the same dispute, have jurisdiction at one stage of the proceedings and, without any change in the relevant legal situation, have none at another.

13. President Klaestad correctly argued (at p. 75 and 76) that the Government of the United States had invoked the reservation, that the Swiss Government had challenged its validity, that the United States Government had thereafter not withdrawn the objection, but on the contrary expressly maintained it in its final submissions of November 6th, 1958, and that the American Agent had still after his qualification of the objection as “somewhat academic” or “somewhat moot” (because his Government assured the Court that the vested shares would not be sold as long as the claim of Interhandel was pending before American courts) asked the Court to adjudicate upon it. Moreover the said assurance did not prevent the sale of the shares as soon as the claim is finally decided by the American courts.—Judge Lauterpacht (at p. 98 and 99) likewise contested this argument of the majority and “for reasons more cogent than that a Government cannot formally maintain an objection and at the same time invite the Court to treat it as being of no importance. If that objection is maintained and if it is not dismissed by the Court, it can subsequently be acted upon by the interested Government whenever it deems it convenient to do so”. Therefore, “a proper administration of justice requires that its validity… must be decided at the very first stage of the proceedings before the Court”. For the same reasons Judge Lauterpacht felt that it was impossible to accede to the Swiss submission that in case of non-dismissal of objection IV a) it should be joined to the merits: “The objection based on the automatic reservation cannot be properly joined to the merits for the reason that being of a formal and peremptory character, namely, being dependent solely upon the determination by the United States, it cannot by definition be examined upon its merits in relation to the substance of the dispute. For it operates automatically, irrespective of the merits of the dispute, by its own propulsion—as it were—as the result of the physical act of having been invoked” (at p. 99 and 100).

14. Sir Percy Spender (p. 54): “The Court… finds it not necessary to adjudicate (on part (a) of the Fourth Objection).—There is more than a little practical wisdom to recommend this as a course to follow. The Objection presents issues of far-reaching significance. They concern not only the interests of the two States engaged in the present proceedings but those of other States as well. I would have preferred to adopt towards part (a) of the Fourth Objection the same attitude as has the Court, but after considerable reflexion I regret that this is not open to me.”—Sir Hersch Lauterpacht (p. 117/118): “There may be reasons militating in favour of postponing a decision holding that that particular Declaration of Acceptance—and, by necessary implication, similar Declarations of Acceptance—are ineffective in law, whether invoked by or against the declaring State. However, these are not reasons of a legal nature.”

15. I don't go into this rather artificial defense. The United States contended that, even if “the dispute” should be held to have arisen subsequently to the coming onto force of the American Declaration of Acceptance of August 26, 1946, it had in any case arisen prior to the coming into force of the Swiss Declaration, which contained no reservation rotione temporis, on 07 28, 1948Google Scholar, and that the Crinciple of reciprocity required that as between the United States and Switzerland the jurisdiction of the Court be limited to disputes arising after July 28, 1948, because “otherwise retroactive effect would be given to the compulsory jurisdiction of the Court”. The Court dismissed this contention by arguing that, although Switzerland as a Respondent could have invoked the reciprocity principle as a defense against the claim made against her by the United States with respect to a dispute that might have arisen between August 26, 1946, and July 28, 1948, it did not by any means follow that that principle could justify the United States as a claimant State relying upon a restriction which die respondent Party, Switzerland, has not included in its own declaration. Comp. on this technical question: Briggs, Herbert W., Reservations to the acceptance of compulsory jurisdiction of the International Court of Justice in Recueil des Cours 1958 (I), Vol. 93, p. 247–249.Google Scholar

The Russian Judge felt that the second Objection should have been rejected on the positive ground that the dispute arose only after July 28, 1948 (comp. note 18).

16. It may be of interest to quote here some of the propositions formulated in this respect by Judge Spender:

“A “dispute” … need not be spelt out or defined with legal exactitude or particularity. It is enough if its subject matter and its nature are identifiable. A dispute may arise long before it crystallizes into its component parts or reveals all its different facets. No special formality is necessary. It need not arise in the course of diplomatic negotiations. It may do so independently thereof and may precede negotiations.—Nor is it a condition precedent to a “dispute” arising that one State must indicate that it intends to resort to international judicial or arbitral procedure or action unless its claim is satisfied…—A dispute may lie dormant for years…—A dispute may … enter upon a new phase. An entirely separate dispute may, of course, arise between the Parties with which the existing dispute is only casually connected. But if the substance of the dispute remains the same, the fact that it has entered upon a new phase or that other issues directly connected with and relevant to the dispute in which the Parties are also in disagreement are subsequently added or appear, or that new claims for relief are presented, cannot alter, the problem…” (p. 60).—Along these lines one can easily go further back in the past, in respect of the Interhandel dispute, than the date of July 26th, 1948, which was without much supporting argument adopted by the Court.

17. On November 6, 1945, being the date of a communication from the Swiss Federal Department, Division of Foreign Affairs, to a Counsellor of the United States Legation at Berne, revealing a definite disagreement by the Swiss authorities with the contentions of the Government of the United States that Interhandel was acting as a cloak for I.G. Farben (Hackworth, Judges, p. 35Google Scholar, Khan, Zafrullah, p. 32Google Scholar, and Spender, , p. 70Google Scholar); at some undefined date during the course of the negotiations leading to the Washington Accord of May 25, 1946 (Córdova, Judge, p. 44Google Scholar); in February 1946, when the Swiss Compensation Office gave its final decision on the Swiss character of Interhandel, adopted by the wiss Government (Judge Wellington Koo, p. 50).

18. Judges Basdevant (p. 30) and Kozhevnikov (p. 31). The latter evidently placed the principal dispute so late on the ground that it was only after July 28, 1948, that “the legal character of the dispute between (the two Governments) was clearly defined”,—a criterium even more stringent than that which the Court adopted.

19. Comp. this Tijdschrift, vol. VI (1959)Google Scholar, Special issue, p. 373/374 (objection 6).Google Scholar

20. As was correctly pointed out by President Klaestad (p. 79/80): “If this Reservation (i.e. IV-a) should be considered as legally valid, it is difficult to see how it is possible for the Court to decide that the dispute relates to international law and not to matters within the domestic jurisdiction of the United States, inasmuch as that question, as a consequence of the invocation of the Reservation, is to be determined by the United States and not by the Court…—If, on the other hand, the Reservation is to be considered as invalid, and if this invalidity should, as has been suggested, entail the invalidity of the Declaration of Acceptance as a whole, the question of adjudicating upon this Preliminary Objection could not arise. Without a valid Declaration accepting the Court's compulsory jurisdiction, the Court would lack jurisdiction to decide whether the dispute is of domestic or international character.—These considerations show how necessary it would have been to adjudicate upon part (a) of the Fourth Preliminary Objection before adjudicating upon part (b) of that Objection.”

21. Comp. the dissenting opinion of Judge Armand-Ugón, at p. 91.

22. Comp. the quotations in note 14.

23. I.C.J. Reports, 1957, p. 43 ff.Google Scholar On that occasion, a similar clause of sovereign appraisal, attached to a reservation in the French Declaration of Acceptance, was invoked by way of reciprocity against a French Application by Norway as the respondent Party, and not at that time impugned by that Party as being legally invalid. It was for this latter reason that the Court acted in that case on the assumption of the validity of the clause, not considering itself bound, nor even entitled, to raise the issue of its validity proprio motu against a common attitude of the parties (Judges Guerrero and Lauterpacht dissenting). Comp. this Tijdschrift, vol. IV (1957), p. 373ff., in particular p. 390 ff.Google Scholar

24. Before this struggle began in the preliminary phase of the Interhandel Case, it had already played a preponderant rôle in its preceding Interim Measures phase. Comp. I.C.J. Reports 1957, p. 105Google Scholar and this Tijdschrift, vol. VI (1959), Special issue (July 1959), p. 375 ff.Google Scholar

25. Comp. this Tijdschrift, vol. IV (1957), p. 390 ff.Google Scholar

26. Lauterpacht, Judge, p. 101 ff, 116 ffGoogle Scholar, Spender, Judge, p. 59Google Scholar: “In my opinion, the reservation of the United States proviso (b) to its Declaration of Acceptance is invalid. Neither it nor any part of it can be severed therefrom since it is of the essence of the Declaration of Acceptance. The Declaration is incompatible with any compulsory legal obligation and with Article 36 (6). It has no legal force as a declaration under Article 36 (2). Accordingly, I am compelled to the conclusion that the United States Declaration of Acceptance is, and has from its inception been, null and void. The United States cannot sue or be sued in this Court on the basis of its Declaration. It has, in short, never legally submitted to the jurisdiction of the Court.”

In exactly the opposite sense President Klaestad, p. 78: “These considerations have led me to the conclusion that the Court, both by its Statute and by the Charter, is prevented from acting upon that part of the Reservations which is in conflict with Article 36, paragraph 6, of the Statute, but that this circumstance does not necessarily imply that it is impossible for the Court to give effect to the other parts of the Declaration of Acceptance which are in conformity with the Statute. Part (a) of the Fourth Preliminary Objection should therefore in my view be rejected”, and Armand-Ugón, Judge, p. 93/94.Google Scholar

The Swiss Judge ad hoc understandably followed in this respect also the lead of President Klaestad (p. 32). Had he not done so, then he would have undermined the jurisdictional basis of the Swiss Application, just as the Norwegian Government would have risked doing with regard to its own Application in the Loans case if it had challenged on that occasion the validity of the French Declaration.

27. This Tijdschrift, vol. IV (1957), p. 399–400Google Scholar; VI (1959), Special issue (July 1959), p. 376–379.

28. A fortiori, because it is in particular the United States which has always and consistently in the course of its history insisted upon preserving the ultimate power of decision with regard to its commitments to submit a dispute to arbitral or judicial settlement. Judge Lauterpacht reviews this particular feature of American diplomacy from 1897 to 1948 (p. 107–111).

29. It was in particular this aspect that was stressed by President Klaestad and Judge Armand-Ugón in support of their finding that the United States Government cannot have intended to make the whole of its Declaration of Acceptance dependent upon the Court conforming to a clause aimed at depriving it of its elementary right to take an independent decision on its own jurisdiction, and that, in consequence, the clause was severable from the rest of the Declaration (p. 77–78 and p. 93–94).

30. In the Norwegian Loans Case the Canadian Judge Read had construed the corresponding French clause of sovereign appraisal “as permitting the Court to review the reasonableness of the circumstances under which the reservation was invoked” (I.C.J. Reports 1957, p. 93ffGoogle Scholar). However, his Australian successor Sir Percy Spender, relying also on the difference in the terms in which the French and the American clauses are couched: “as understood” in the French, “as determined” in the American declaration, dismissed this attempt at restrictive interpretation completely: “In my opinion there is no room whatever for construing the United States reservation by implying into it a concept that the determination must be reasonable or that it must not be unreasonable” (at p. 58). —Comp. also Judge Lauterpacht's dissenting opinion at p. 112–113.

31. At the beginning of his dissenting opinion (p. 95) Judge Lauterpacht appears to be of the opinion that by declaring the Swiss Application inadmissible on account of non-exhaustion of local remedies, after rejecting three preliminary objections of the United States, “the Court has assumed jurisdiction both in the present case and in any future case connected with the present proceedings after the local remedies have been exhausted”. This opinion would certainly be perfectly correct if the Judgment were a logically coherent document. It is, however, quite impossible to draw such logical conclusions from a Judgment which itself lacks any inner logic. The Court clearly intended to reserve its judgment on Objection IV a) against its jurisdiction until later, probably in the hope that it will never become necessary for it to pronounce upon that Objection. The inherent lack of logic in the Judgment would, therefore, seem to contradict Judge Lauterpacht's conclusion at p. 100 that “the Judgment of the Court, based on the fact of non-exhaustion of local remedies, implies the assurance to the applicant State that, once it has done its best to exhaust local remedies, the Court will proceed to the adjudication of the dispute on the merits—unhampered by any other objections to its jurisdiction. There would otherwise be no point in requiring the injured party to exhaust local remedies…” As the Court itself states in so many words at p. 26, “part (a) of the Fourth Preliminary Objection is without object at the present stage of the proceedings” (my italics, V.), which would seem rather to justify the conclusion that, should the dispute again be submitted to the Court as soon as the remedy available to Interhandel in United States courts is finally exhausted, the Court will still be confronted with the necessity of negotiating the frightening hurdle of Objection IV a).

32. This point was also made by Judge Lauterpacht at the end of his dissenting opinion (at p. 121/122) where, after having remarked that “a State is not entitled to advance a preliminary objection against the jurisdiction of the Court unless there is a limitation to that effect either in the Declaration of Acceptance or in the Statute of the Court”, he argues as follows: “From whatever angle the question is approached, it matters little whether a reservation of this kind is incorporated in a Declaration of Acceptance. States are in any case fully protected from any interference whatsoever by the Court in matters which are according to international law essentially within their jurisdiction. They are so protected not by virtue of any reservation but in consequence of the fact that if a matter is exclusively within the domestic jurisdiction of a State, not circumscribed by any obligation stemming from a source ef international law as formulated in Article 38 of its Statute, the Court must inevitably reject the claim as being without foundation in international law.—As the United States has made no reservation of matters which according to international law are within its domestic jurisdiction, Preliminary Objection IV b) must properly be regarded as a defence on the merits and normally—namely, if there existed a valid Declaration of Acceptance—would have to be examined, during the proceedings on the merits, as being a substantive plea in the sense that there is no rule of international law limiting the freedom of action of the United States on the subject. That defence, if justified, is of a potency transcending that of any reservation.”

33. The most principled standpoint in this respect was that taken by Judge Winiarski (p. 83/84) who argued that there was a deep juridical chasm between the two parts of the dispute: “The Court is not required to consider what was the purpose of the Swiss Government in formulating its alternative claim regarding arbitration and conciliation. That claim is presented as distinct from the principal claim and must be examined as such. Its subject matter is clearly defined… (W)here the rights and obligations of the two States flow directly from their treaties and agreements there can be no question of settling such a dispute by recourse to local remedies. The American Courts are competent to adjudicate on the rights of a Swiss national; they have no competence to adjudicate on the existence of an obligation on the part of the United States to submit to arbitration or conciliation. The legal problems are here on different planes and their solution must be different.” However, it should be understood that “a decision of the Court dismissing the Third Objection of the United States so far as concerns the alternative submission would in no way affect the right of the arbitral tribunal, should one be set up, to apply the local remedies rule quite independently, should occasion arise, while conciliation proceedings are not required to observe that rule”.—One can compare this analysis with the complicated situation which arose in the two-stage Ambatielos case.

For the rest, President Klaestad and Judges Armand Ugón, Lauterpacht and Spiropoulos felt that this objection could only be adequately appraised after a regular procedure dealing with the merits.

34. This was not the only argument of the Court. It might have contented itself by referring to the “well-established rule of customary international law” which it applies, but it explains its observance by the rationale that “before resort may be had to an international court in such a situation (i.e. when a State has espoused the cause of its national whose rights are claimed to have been disregarded in another State in violation of international law), it has been considered necessary that the State where the violation occurred should have an opportunity to redress it by its own means within the framework of its own domestic legal system”. It then used an argument a fortiori: the rule must in particular be observed in a case where domestic proceedings are actually pending, and when the two actions—national in the United States courts and international in the International Court of Justice—are designed to obtain the same result: the restitution of the assets of Interhandel vested in the United States. It was in particular the latter assertion of the majority which was strongly contradicted by a number of Judges, inter alios Judges Winiarski and Armand-Ugón.

35. According to Judge Cordova. “The main reason for (the) existence (of the principle of exhaustion of local remedies) lies in the indispensable necessity to harmonize the international and the national jurisdictions—assuring in this way the respect due to the sovereign jurisdiction of States—by which nationals and foreigners have to abide and to the diplomatic protection of the Governments to which only foreigners are entitled. This harmony, this respect for the sovereignty of States is brought about by giving priority to the jurisdiction of the local courts of the State in cases of foreigners claiming against an act of its executive or legislative authorities. This priority, in turn, is assured only by means of the adherence to the principle of exhaustion of local remedies” (p. 45).

36. Apart form two cases in which the objection was upheld—either on the basis of a treaty clause (Electricity Company of Sofia and Bulgaria (Preliminary Objection), Publications P.C.I.J., series A/B, no. 77), or as a defence on the merits (Panevezys-Saldutiskis Railway Case (Merits), l.c., series A/B, no 76)—, it was at once dismissed in three cases—Certain German Interests in Polish Upper-Silesia, l.c., series A, no. 6, in which it had not been raised as a preliminary objection, Factory of Chorzów (Claim for indemnity) (Jurisdiction), l.c., series A, no. 9, and Ambatielos (Preliminary Objection), I.C.J. Reports 1953, pp. 18, 22Google Scholar and 23—and three times joined to the merits–Case concerning the Administration of the Prince of Pless (Interim Measures of Protection), Publications P.C.I.J., series A/B, no. 54, Losinger & Co. Case (Preliminary Objection) l.c., series A/B, no. 67, and Panevezys-Saldutiskis Railway Case (Preliminary Objection), l.c., series A/B, no. 75.