The origin of the litigation dealt with in this article, traceable to the lack of capacity to pay of German Governments after World War I and World War II, goes back to the period between these two conflicts. The German defeat in 1918 entailed economic consequences giving rise, inter alia, to the controversy adjudicated by the award of 16 May 1980. The Treaty of Versailles required the vanquished empire to assume entire responsibility by means of reparations payments for the losses and damage suffered by the victorious Allied Powers. At the outset, these liabilities were unlimited in amount. In 1921 their sum total was fixed by the London Payments Schedule at 132 milliards of gold marks (132,000 million), without any regard being paid to the problems involved in the raising and transfer of the funds. The combined impact of these measures and crippling post-war domestic inflation soon resulted in huge arrears, suggesting the impossibility of carrying out the agreement, and the conclusion that reparations could not be collected unless the German economy had sufficient strength to cope with that task.