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Status of

Denmark v. Norway


[p23] The Court,

composed as above,
delivers the following judgment:
[1] By an Application instituting proceedings, filed with the Registry of the Court on July 12th, 1931, in
accordance with Article 40 of the Statute and Article 35 of the Rules of Court, the Royal Danish
Government, relying on the optional clause of Article 36, paragraph 2, of the Statute, brought before the
Permanent Court of International Justice a suit against the Royal Norwegian Government on the ground
that the latter Government had, on July 10th, 1931, published a proclamation declaring that it had
proceeded to occupy certain territories in Eastern Greenland, which, in the contention of the Danish
Government, were subject to the sovereignty of the Crown of Denmark. The Application, after thus
indicating the subject of the dispute, proceeds, subject to the subsequent presentation of any cases,
counter-cases and any other documents or evidence, to formulate the claim by asking the Court for
judgment to the effect that "the promulgation of the above-mentioned declaration of occupation and any
steps taken in this respect by the Norwegian Government constitute a violation of the existing legal
situation and are accordingly unlawful and invalid".
[7] Further, the Danish Government, in the Application, reserves the right, in the first place, to apply to
the Court, should circumstances require it, for the indication of interim measures for the protection of its
rights and, in the second place, to ask the Court to decide as to the nature of the reparation due to the
Danish Government in consequence of the Norwegian Government's act of which it complains.
[12] Under the same Article of the Rules of Court, the Norwegian Government, in its Counter-Case, asks
for judgment to the effect that
"Denmark has no sovereignty over Eirik Raudes Land;
Norway has acquired the sovereignty over Eirik Raudes Land; The Danish Government should bear the
costs incurred by the Norwegian Government in this case".
[14] The submission of the case being in all respects regular, these are the circumstances in which the Court
is now called upon to give judgment.
[15] According to the royal Norwegian proclamation of July 10th, 1931, which gave rise to the present
dispute, the "country" the "taking possession" of which "is officially confirmed" and which is "placed under
Norwegian sovereignty" is "situated between Carlsberg Fjord on the South and Bessel Fjord on the North,

in Eastern Greenland", and extends from latitude 71 30' to 75 40' N.

[16] By "Eastern Greenland" is meant the eastern coast of Greenland.
[17] It must have been intended that on the eastern side the sea and on the western side the "Inland Ice"
should constitute the limits of the area occupied under the proclamation of July 10th, though the
proclamation itself is silent on the subject. Indeed, Counsel for the Danish Government was disposed to
criticize the validity of the proclamation because of the absence of any western limit of the occupation. This
is a point, however, which in view of the conclusions reached by the Court need not be pursued.
406] It appears that the object of the conversations of July 14th and 22nd, 1919, between M. Ihlen and M.
Krag was, so far as Denmark was concerned, to obtain a final and binding promise; but, in that case, the
form of the Danish dmarche leaves much to be desired. The outcome was a verbal answer given by the
Norwegian Minister for Foreign Affairs, without any discussion between the two Governments upon the
substance of the question and without the question having been examined in Norway. The responsibility for
this fatal omission rests first and foremost upon Denmark.
[407] M. Ihlen, it is true, when making his declaration of July 22nd, was speaking on behalf of the
Norwegian Government and promised that Norway would raise no difficulty in the future settlement of this
matter. Such a promise made by the Minister for Foreign Affairs is, in principle, valid and binding. But in
the present case there are special circumstances. M. Ihlen, when making his declaration, was labouring
under a fundamental and excusable misapprehension. I would refer to M. Raestad's letter of July 20th,
1921, to the Danish Minister at Oslo : ".... I have now received a communication from Ihlen, whence it
appears - as I thought - that, in his conversation with M. Krag, he did not give it to be understood that
Norway would agree to the new territory [p119] being placed under the Danish Monopoly." This
misapprehension on the part of M. Ihlen was, in the first place, due to the fact that the Danish request had
been made verbally and was not accompanied by the information given to the other Powers regarding the
extension of the monopoly and regime of exclusion, which was, as subsequently explained by Denmark,
the real object of the demarche. This object was explained in a note addressed on December 19th, 1921, by
the Danish Minister at Oslo to the Norwegian Ministry for Foreign Affairs. In that note it is explained that
the words used in the American reply and quoted by M. Krag to M. Ihlen: ".... to the Danish Government
extending their political and economic interests to the whole of Greenland", contemplated precisely the
extension to the whole of Greenland of the special regulations in question, i.e. the regulations of the
monopoly and rgime of exclusion.
412] On May 10th, the Danish Government formally broke off the negotiations in progress with the
Norwegian Government by means of the following note sent by the Danish Minister at Oslo:
"With regard to the Greenland question, I have received from the Ministry for Foreign Affairs a telegram,
the terms of which I venture to transmit to you:
'The Ministry for Foreign Affairs does not desire any further dmarche to be made with a view to obtaining
from the Norwegian Government a written declaration, but desires to rest content with the promise already
made verbally on behalf of Norway.'"
417] Eighteen days after the notification of the closing of the whole of Greenland, M. Rstad, the
Norwegian Minister for Foreign Affairs, wrote to the Danish Minister in the following terms:
"You will no doubt have to reckon with the fact that the present Norwegian Government, like its
predecessor, in agreement with the opinion of other responsible circles, is unable to accept an extension of

Danish sovereignty over Greenland involving a corresponding extension of the monopoly, to the detriment
of Norwegian interests."
[418] The Danish Government has argued before the Court that, by this letter, Norway was not contesting
the sovereignty of Denmark over the whole of Greenland. The accuracy of this allegation cannot be
admitted. The Danish Government, in its overtures to foreign Powers, had linked the question of [p121]
sovereignty and that of the monopoly so closely together that it is impossible to treat them as separate in
this connection. The Danish Government had spoken of an extension of sovereignty, while - according to
its own statement - it had in mind, from beginning to end, the extension of the monopoly system. In a
memorandum, dated January 18th, 1921, from the Danish Legation at Oslo to the Norwegian Minister for
Foreign Affairs, a description is given of the overtures made to the Great Powers; it contains the following
passage: "The Ministry accordingly sent instructions, at the beginning of last March, to its Ministers in
London, Paris, Rome and Tokyo, to endeavour to obtain official recognition by the Governments in
question of Danish sovereignty over the whole of Greenland urging, in support of the request, the actual
position of Denmark in relation to Greenland; the best method of according this recognition would, in the
opinion of the Danish Government, be for the said Governments to make declarations corresponding to that
already given by the United States." But during the present proceedings, the Danish Government has laid
considerable stress on the fact that the American reply contained a definite and specific reference to the
system of monopoly, which Denmark was proposing to continue and to develop. In the instructions sent to
the Danish Ministers abroad, this inseparable interconnection, this unity in dualism, was brought out by the
words: "it is desirable that the Danish Government should extend its care [for the Eskimos, by means of the
monopoly] by means of its sovereignty over the whole of Greenland."
[421] In this connection, some importance attaches to the fact that in both the overtures made to the
Norwegian Government in 1919 and 1921 - and not least in the latter of these overturesthe Danish
Government had shown that it did not regard itself as possessing sovereignty over the whole of Greenland.
The conviction thus implanted in the mind of the Norwegian Government led to certain consequences.
[422] When one considers in succession the incomplete form of the request made to M. Ihlen, the light
which was subsequently thrown on the plan for the extension of the monopoly and the regime of exclusion,
the not very conciliatory attitude of the Danish Government, when the Norwegian Government desired to
have a settlement of Norwegian economic interests in conjunction with the recognition of Danish
sovereignty, and lastly, the Danish decision to close Eastern Greenland on the ground, as was alleged, that
Norway had recognized the extension of Danish sovereignty, one is driven to the conclusion that it would
be contrary to all justice that, after the rupture of the negotiations by Denmark in 1921, Norway should still
be regarded as bound by M. Ihlen's promise, and obliged to refrain from making difficulties in a future
settlement between the two countries.
[423] It is necessary here to mention another fact which is of some importance in this connection. By a
declaration made to the Danish Government on September 6th, 1920, the British Government had reserved
its right to be consulted, in case Denmark should contemplate selling Greenland. This British reservation,
which was not rejected by the Danish Government, was not communicated to the Norwegian Government,
to whom it presented, without doubt, considerable importance.
[424] Keeping in view the realities of the case, I am thus led to the conclusion that the Krag-Ihlen
arrangement had lost its binding force in 1921.
[425] Since that time, the Norwegian Government has unceasingly maintained that Denmark only
possesses sovereignty over a part of Greenland, and that Norway has not recognized a Danish sovereignty

extending to the whole country.

[426] Nevertheless, in a note dated July 13th, 1923, the Norwegian Government declared that it was
prepared to enter into [p123] fresh negotiations on "an entirely free basis". The Norwegian conception was
given very definite expression in the Protocol of Closure of the Danish-Norwegian negotiations, dated
January 28th, 1924. The Norwegian delegation declared therein that all parts of Greenland, which were not
effectively under Danish administration, were terra nullius.
[427] Accordingly, the Norwegian Government has consistently maintained, ever since the breaking off of
the negotiations by the Danish Government in 1921, that it is not bound by the Krag-Ihlen arrangement.
[428] The reasons which I have set forth above lead me to accept the submissions presented by the
Norwegian Government in regard to sovereignty, and for these reasons consequently prevent me, to my
regret, from signing the judgment which the Court has delivered. I am, however, in agreement with the
conclusion of the judgment which deals with the costs of the proceedings.

(United Kingdom v. Norway)
International Court of Justice
December 18, 1951
General List No. 5
The facts which led the United Kingdom to bring the case before the Court are briefly as
The historical facts laid before the Court establish that as the result of complaints from the King
of Denmark and of Norway, at the beginning of the seventeenth century, British fishermen
refrained from fishing in Norwegian coastal waters for a long period, from 1616-1618 until 1906.
In 1906 a few British fishing vessels appeared off the coasts of Eastern Finnmark. From 1908
onwards they returned in greater numbers. These were trawlers equipped with improved and
powerful gear. The local population became perturbed, and measures were taken by the
Norwegian Government with a view to specifying the limits within which fishing was prohibited
to foreigners.
The first incident occurred in 1911 when a British trawler was seized and condemned for having
violated these measures. Negotiations ensued between the two Governments. These were
interrupted by the war in 1914. From 1922 onwards incidents recurred. Further conversations
were initiated in 1924. In 1932, British trawlers, extending the range of their activities, appeared
in the sectors off the Norwegian coast west of the North Cape, and the number of warnings and
arrests increased. On July 27th, 1933, the United Kingdom Government sent a memorandum to
the Norwegian Government complaining that in delimiting the territorial sea the Norwegian
authorities had made use of unjustifiable base-lines. On July 12th, 1935, a Norwegian Royal
Decree was enacted delimiting the Norwegian fisheries zone north of 66 degrees 28.8' North
The United Kingdom made urgent representations in Oslo in the course of which the question of
referring the dispute to the Permanent Court of International Justice was raised. Pending the
result of the negotiations, the Norwegian Government made it known that Norwegian fishery
patrol vessels would deal leniently with foreign vessels fishing a certain distance within the
fishing limits. In 1948, since no agreement had been reached, the Norwegian Government
abandoned its lenient enforcement of the 1935 Decree; *125 incidents then became more and
more frequent. A considerable number of British trawlers were arrested and condemned. It was
then that the United Kingdom Government instituted the present proceedings.

As has been said, the United Kingdom Government concedes that Norway is entitled to claim as
internal waters all the waters of fjords and sunds which fall within the conception of a bay as
defined in international law whether the closing line of the indentation is more or less than ten
sea miles long. But the United Kingdom Government concedes this only on the basis of historic
title; it must therefore be taken that that Government has not abandoned its contention that the
ten-mile rule is to be regarded as a rule of international law.
In these circumstances the Court deems it necessary to point out that although the ten-mile rule
has been adopted by certain States both in their national law and in their treaties and
conventions, and although certain arbitral decisions have applied it as between these States, other
States have adopted a different limit. Consequently, the ten-mile rule has not acquired the
authority of a general rule of international law.
In any event the ten-mile rule would appear to be inapplicable as against Norway inasmuch as
she has always opposed any attempt to apply it to the Norwegian coast.
The Court now comes to the question of the length of the base-lines drawn across the waters
lying between the various formations of the 'skjaergaard'. Basing itself on the analogy with the
alleged general rule of ten miles relating to bays, the United Kingdom Government still
maintains on this point that the length of straight lines must not exceed ten miles.
In this connection, the practice of States does not justify the formulation of any general rule of
law. The attempts that have been made to subject groups of islands or coastal archipelagoes to
conditions analogous to the limitations concerning bays (distance between the islands not
exceeding twice the breadth of the territorial waters, or ten or twelve sea miles), have not got
beyond the stage of proposals.
Furthermore, apart from any question of limiting the lines to ten miles, it may be that several
lines can be envisaged. In such cases the coastal State would seem to be in the best position to
appraise the local conditions dictating the selection.
Consequently, the Court is unable to share the view of the United Kingdom Government, that
'Norway, in the matter of base-lines, now claims recognition of an exceptional system'. As will
be shown later, all that the Court can see therein is the application of general international law to
a specific case.
*132 The Conclusions of the United Kingdom, points 5 and 9 to 11, refer to waters situated
between the base-lines and the Norwegian mainland. The Court is asked to hold that on historic
grounds these waters belong to Norway, but that they are divided into two categories: territorial
and internal waters, in accordance with two criteria which the Conclusions regard as well
founded in international law, the waters falling within the conception of a bay being deemed to
be internal waters, and those having the character of legal straits being deemed to be territorial
As has been conceded by the United Kingdom, the 'skjaergaard' constitutes a whole with the
Norwegian mainland; the waters between the base-lines of the belt of territorial waters and the
mainland are internal waters. However, according to the argument of the United Kingdom a
portion of these waters constitutes territorial waters. These are inter alia the waters followed by
the navigational route known as the Indreleia. It is contended that since these waters have this
character, certain consequences arise with regard to the determination of the territorial waters at
the end of this water-way considered as a maritime strait.
The Court is bound to observe that the Indreleia is not a strait at all, but rather a navigational
route prepared as such by means of artificial aids to navigation provided by Norway. In these
circumstances the Court is unable to accept the view that the Indreleia, for the purposes of the
present case, has a status different from that of the other waters included in the 'skjaergaard'.
Thus the Court, confining itself for the moment to the Conclusions of the United Kingdom, finds
that the Norwegian Government in fixing the base-lines for the delimitation of the Norwegian
fisheries zone by the 1935 Decree has not violated international law.
It does not at all follow that, in the absence of rules having the technically precise character
alleged by the United Kingdom Government, the delimitation undertaken by the Norwegian
Government in 1935 is not subject to certain principles which make it possible to judge as to its
validity under international law. The delimitation of sea areas has always an international
aspect; it cannot be dependent merely upon the will of the coastal State as expressed in its

municipal law. Although it is true that the act of delimitation is necessarily a unilateral act,
because only the coastal State is competent to undertake it, the validity of the delimitation with
regard to other States depends upon international law.
*133 In this connection, certain basic considerations inherent in the nature of the territorial sea,
bring to light certain criteria which, though not entirely precise, can provide courts with an
adequate basis for their decisions, which can be adapted to the diverse facts in question.
Among these considerations, some reference must be made to the close dependence of the
territorial sea upon the land domain. It is the land which confers upon the coastal State a right to
the waters off its coasts. It follows that while such a State must be allowed the latitude necessary
in order to be able to adapt its delimitation to practical needs and local requirements, the drawing
of base-lines must not depart to any appreciable extent from the general direction of the coast.
Another fundamental consideration, of particular importance in this case, is the more or less
close relationship existing between certain sea areas and the land formations which divide or
surround them. The real question raised in the choice of base-lines is in effect whether certain
sea areas lying within these lines are sufficinetly closely linked to the land domain to be subject
to the regime of internal waters. This idea, which is at the basis of the determination of the rules
relating to bays, should be liberally applied in the case of a coast, the geographical configuration
of which is as unusual as that of Norway.
Finally, there is one consideration not to be overlooked, the scope of which extends beyond
purely geographical factors: that of certain economic interests peculiar to a region, the reality
and importance of which are clearly evidenced by a long usage.
Norway puts forward the 1935 Decree as the application of a traditional system of delimitation,
a system which she claims to be in complete conformity with international law. The Norwegian
Government has referred in this connection to an historic title, the meaning of which was made
clear by Counsel for Norway at the sitting on October 12th, 1951: 'The Norwegian Government
does not rely upon history to justify exceptional rights, to claim areas of sea which the general
law would deny; it invokes history, together with other factors, to justify the way in which it
applies the general law.' This conception of an historic title is in consonance with the Norwegian
Government's understanding of the general rules of international law. In its view, these rules of
international law take into account the diversity of facts and, therefore, concede that the drawing
of base-lines must be adapted to the special conditions obtaining in different regions. In its view,
the system of delimitation applied in 1935, a system characterized by the use of straight lines,
does not therefore infringe the general law; it is an adaptation rendered necessary by local
*134 The Court must ascertain precisely what this alleged system of delimitation consists of,
what is its effect in law as against the United Kingdom, and whether it was applied by the 1935
Decree in a manner which conformed to international law.
It is common ground between the Parties that on the question of the existence of a Norwegian
system, the Royal Decree of February 22nd, 1812, is of cardinal importance. This Decree is in
the following terms: 'We wish to lay down as a rule that, in all cases when there is a question of
determining the limit of our territorial sovereignty at sea, that limit shall be reckoned at the
distance of one ordinary sea league from the island or islet farthest from the mainland, not
covered by the sea; of which all proper authorities shall be informed by rescript.'
This text does not clearly indicate how the base-lines between the islands or islets farthest from
the mainland were to be drawn. In particular, it does not say in express terms that the lines must
take the form of straight lines drawn between these points. But it may be noted that it was in this
way that the 1812 Decree was invariably construed in Norway in the course of the 19th and 20th
The Decree of October 16th, 1869, relating to the delimitation of Sunnmore, and the Statement
of Reasons for this Decree, are particularly revealing as to the traditional Norwegian conception
and the Norwegian construction of the Decree of 1812. It was by reference to the 1812 Decree,
and specifically relying upon 'the conception' adopted by that Decree, that the Ministry of the
Interior justified the drawing of a straight line 26 miles in length between the two outermost
points of the 'skjaergaard'. The Decree of September 9th, 1889, relating to the delimitation of
Romsdal and Nordmore, applied the same method, drawing four straight lines, respectively 14.7
miles, 7 miles, 23.6 miles and 11.6 miles in length.

The 1812 Decree was similarly construed by the Territorial Waters Boundary Commission
(Report of February 29th, 1912, pp. 48-49), as it was in the Memorandum of January 3rd, 1929,
sent by the Norwegian Government to the Secretary-General of the League of Nations, in which
it was said: 'The direction laid down by this Decree should be interpreted in the sense that the
starting-point for calculating the breadth of the territorial waters should be a line drawn along the
'skjaergaard' between the furthest rocks and, where there is no 'skjaergaard', between the extreme
points.' The judgment delivered by the Norwegian Supreme Court in 1934, in the St. Just case,
provided final authority for this interpretation. This conception accords with the geographical
characteristics of the Norwegian coast and is not contrary to the principles of international law.
*135 It should, however, be pointed out that whereas the 1812 Decree designated as base-points
'the island or islet farthest from the mainland not covered by the sea', Norwegian governmental
practice subsequently interpreted this provision as meaning that the limit was to be reckoned
from the outermost islands and islets 'not continuously covered by the sea'.
The 1812 Decree, although quite general in its terms, had as its immediate object the fixing of
the limit applicable for the purposes of maritime neutrality. However, as soon as the Norwegian
Government found itself impelled by circumstances to delimit its fisheries zone, it regarded that
Decree as laying down principles to be applied for purposes other than neutrality. The
Statements of Reasons of October 1st, 1869, December 20th, 1880, and May 24th, 1889, are
conclusive on this point. They also show that the delimitation effected in 1869 and in 1889
constituted a reasoned application of a definite system applicable to the whole of the Norwegian
coast line, and was not merely legislation of local interest called for by any special requirements.
The following passage from the Statement of Reasons of the 1869 Decree may in particular be
referred to: 'My Ministry assumes that the general rule mentioned above [namely, the four-mile
rule], which is recognized by international law for the determination of the extent of a country's
territorial waters, must be applied here in such a way that the sea area inside a line drawn parallel
to a straight line between the two outermost islands or rocks not covered by the sea, Svinoy to
the south and Storholmen to the north, and one geographical league north-west of that straight
line, should be considered Norwegian maritime territory.'
The 1869 Statement of Reasons brings out all the elements which go to make up what the
Norwegian Government describes as its traditional system of delimitation: base-points provided
by the islands or islets farthest from the mainland, the use of straight lines joining up these
points, the lack of any maximum length for such lines. The judgment of the Norwegian Supreme
Court in the St. Just case upheld this interpretation and added that the 1812 Decree had never
been understood or applied 'in such a way as to make the boundary follow the sinuosities of the
coast or to cause its position to be determined by means of circles drawn round the points of the
Skjaergaard or of the mainland furthest out to sea-a method which it would be very difficult to
adopt or to enforce in practice, having regard to the special configuration of this coast'. Finally,
it is established that, according to the Norwegian system, the base-lines must follow the general
direction of the coast, which is in conformity with international law.
Equally significant in this connection is the correspondence which passed between Norway and
France between 1869-1870. On December 21st, 1869, only two months after the promulgation
*136 of the Decree of October 16th relating to the delimitation of Sunnmore, the French
Government asked the Norwegian Government for an explanation of this enactment. It did so
basing itself upon 'the principles of international law'. In a second Note dated December 30th of
the same year, it pointed out that the distance between the base-points was greater than 10 sea
miles, and that the line joining up these points should have been a broken line following the
configuration of the coast. In a Note of February 8th, 1870, the Ministry for Foreign Affairs,
also dealing with the question from the point of view of international law, replied as follows:
'By the same Note of December 30th, Your Excellency drew my attention to the fixing of the
fishery limit in the Sunnmore Archipelago by a straight line instead of a broken line. According
to the view held by your Government, as the distance between the islets of Svinoy and
Storholmen is more than 10 sea miles, the fishery limit between these two points should have
been a broken line following the configuration of the coast line and nearer to it than the present
limit. In spite of the adoption in some treaties of the quite arbitrary distance of 10 sea miles, this
distance would not appear to me to have acquired the force of an international law. Still less
would it appear to have any foundation in reality: one bay, by reason of the varying formations

of the coast and sea-bed, may have an entirely different character from that of another bay of the
same width. It seems to me rather that local conditions and considerations of what is practicable
and equitable should be decisive in specific cases. The configuration of our coasts in no way
resembles that of the coasts of other European countries, and that fact alone makes the adoption
of any absolute rule of universal application impossible in this case.
I venture to claim that all these reasons militate in favour of the line laid down by the Decree of
October 16th. A broken line, conforming closely to the indentations of the coast line between
Svinoy and Storholmen, would have resulted in a boundary so involved and so indistinct that it
would have been impossible to exercise any supervision over it....'
Language of this kind can only be construed as the considered expression of a legal conception
regarded by the Norwegian Government as compatible with international law. And indeed, the
French Government did not pursue the matter. In a Note of July 27th, 1870, it is said that, while
maintaining its standpoint with regard to principle, it was prepared to accept the delimitation laid
down by the Decree of October 16th, 1869, as resting upon 'a practical study of the configuration
of the coast line and of the conditions of the inhabitants'.
The Court, having thus established the existence and the constitutent elements of the Norwegian
system of delimitation, further finds that this system was consistently applied by Norwegian
*137 authorities and that it encountered no opposition on the part of other States.
The United Kingdom Government has however sought to show that the Norwegian Government
has not consistently followed the principles of delimitation which, it claims, form its system, and
that it has admitted by implication that some other method would be necessary to comply with
international law. The documents to which the Agent of the Government of the United Kingdom
principally referred at the hearing on October 20th, 1951, relate to the period between 1906 and
1908, the period in which British trawlers made their first appearance off the Norwegian coast,
and which, therefore, merits particular attention.
The United Kingdom Government pointed out that the law of June 2nd, 1906, which prohibited
fishing by foreigners, merely forbade fishing in 'Norwegian territorial waters', and it deduced
from the very general character of this reference that no definite system existed. The Court is
unable to accept this interpretation, as the object of the law was to renew the prohibition against
fishing and not to undertake a precise delimitation of the territorial sea.
The second document relied upon by the United Kingdom Government is a letter dated March
24th, 1908, from the Minister for Foreign Affairs to the Minister of National Defence. The
United Kingdom Government thought that this letter indicated an adherence by Norway to the
low-water mark rule contrary to the present Norwegian position. This interpretation cannot be
accepted; it rests upon a confusion between the low-water mark rule as understood by the United
Kingdom, which requires that all the sinuosities of the coast line at low tide should be followed,
and the general practice of selecting the low-tide mark rather than that of the high tide for
measuring the extent of the territorial sea.
The third document referred to is a Note, dated November 11th, 1908, from the Norwegian
Minister for Foreign Affairs to the French Charge d'Affaires at Christiania, in reply to a request
for information as to whether Norway had modified the limits of her territorial waters. In it the
Minister said: 'Interpreting Norwegian regulations in this matter, whilst at the same time
conforming to the general rule of the Law of Nations, this Ministry gave its opinion that the
distance from the coast should be measured from the low-water mark and that every islet not
continuously covered by the sea should be reckoned as a starting-point.' The United Kingdom
Government argued that by the reference to 'the general rule of the Law of Nations', instead of to
its own system of delimitation entailing the use of straight lines, and, furthermore, by its
statement that 'every islet not continuously covered by the sea should be reckoned as a startingpoint',
the Norwegian Government had completely departed from what it to-day describes as its
*138 It must be remembered that the request for information to which the Norwegian
Government was replying related not to the use of straight lines, but to the breadth of Norwegian
territorial waters. The point of the Norwegian Government's reply was that there had been no
modification in the Norwegian legislation. Moreover, it is impossible to rely upon a few words
taken from a single note to draw the conclusion that the Norwegian Government had abandoned
a position which its earlier official documents had clearly indicated.

The Court considers that too much importance need not be attached to the few uncertainties or
contradictions, real or apparent, which the United Kingdom Government claims to have
discovered in Norwegian practice. They may be easily understood in the light of the variety of
the facts and conditions prevailing in the long period which has elapsed since 1812, and are not
such as to modify the conclusions reached by the Court.
In the light of these considerations, and in the absence of convincing evidence to the contrary,
the Court is bound to hold that the Norwegian authorities applied their system of delimitation
consistently and uninterruptedly from 1869 until the time when the dispute arose.
From the standpoint of international law, it is now necessary to consider whether the application
of the Norwegian system encountered any opposition from foreign States.
Norway has been in a position to argue without any contradiction that neither the promulgation
of her delimitation Decrees in 1869 and in 1889, nor their application, gave rise to any
opposition on the part of foreign States. Since, moreover, these Decrees constitute, as has been
shown above, the application of a well-defined and uniform system, it is indeed this system itself
which would reap the benefit of general toleration, the basis of an historical consolidation which
would make it enforceable as against all States.
The general toleration of foreign States with regard to the Norwegian practice is an
unchallenged fact. For a period of more than sixty years the United Kingdom Government itself
in no way contested it. One cannot indeed consider as raising objections the discussions to
which the Lord Roberts incident gave rise in 1911, for the controversy which arose in this
connection related to two questions, that of the four-mile limit, and that of Norwegian
sovereignty over the Varangerfjord, both of which were unconnected with the position of baselines.
It would appear that it was only in its Memorandum of July 27th, 1933, that the United
Kingdom made a formal and definite protest on this point.
The United Kingdom Government has argued that the Norwegian system of delimitation was
not known to it and that the *139 system therefore lacked the notoriety essential to provide the
basis of an historic title enforceable against it. The Court is unable to accept this view. As a
coastal State on the North Sea, greatly interested in the fisheries in this area, as a maritime Power
traditionally concerned with the law of the sea and concerned particularly to defend the freedom
of the seas, the United Kingdom could not have been ignorant of the Decree of 1869 which had
at once provoked a request for explanations by the French Government. Nor, knowing of it,
could it have been under any misapprehension as to the significance of its terms, which clearly
described it as constituting the application of a system. The same observation applies a fortiori
to the Decree of 1889 relating to the delimitation of Romsdal and Nordmore which must have
appeared to the United Kingdom as a reiterated manifestation of the Norwegian practice.
Norway's attitude with regard to the North Sea Fisheries (Police) Convention of 1882 is a
further fact which must at once have attracted the attention of Great Britain. There is scarcely
any fisheries convention of greater importance to the coastal States of the North Sea or of greater
interest to Great Britain. Norway's refusal to adhere to this Convention clearly raised the
question of the delimitation of her maritime domain, especially with regard to bays, the question
of their delimitation by means of straight lines of which Norway challenged the maximum length
adopted in the Convention. Having regard to the fact that a few years before, the delimitation of
Sunnmore by the 1869 Decree had been presented as an application of the Norwegian system,
one cannot avoid the conclusion that, from that time on, all the elements of the problem of
Norwegian coastal waters had been clearly stated. The steps subsequently taken by Great Britain
to secure Norway's adherence to the Convention clearly show that she was aware of and
interested in the question.
The Court notes that in respect of a situation which could only be strengthened with the passage
of time, the United Kingdom Government refrained from formulating reservations.
The notoriety of the facts, the general toleration of the international community, Great Britain's
position in the North Sea, her own interest in the question, and her prolonged abstention would in
any case warrant Norway's enforcement of her system against the United Kingdom.
The Court is thus led to conclude that the method of straight lines, established in the Norwegian
system, was imposed by the peculiar geography of the Norwegian coast; that even before the
dispute arose, this method had been consolidated by a constant and sufficiently long practice, in
the face of which the attitude of governments bears witness to the fact that they did not consider

it to be contrary to international law.

For these reasons,
rejecting all submissions to the contrary,
by ten votes to two,
that the method employed for the delimitation of the fisheries zone by the Royal Norwegian
Decree of July 12th, 1935, is not contrary to international law; and
by eight votes to four,
that the base-lines fixed by the said Decree in application of this method are not contrary to
international law.
Done in French and English, the French text being authoritative, at the Peace Palace, The
Hague, this eighteenth day of December, one thousand nine hundred and fifty-one, in three
copies, one of which will be placed in the archives of the Court and the others transmitted to the
Government of the United Kingdom of Great Britain and Northern Ireland and to the
Government of the Kingdom of Norway, respectively.
(Signed) BASDEVANT, President.
(Signed) E. HAMBRO, Registrar.

Corfu Channel (United Kingdom v. Albania)

Date of Application: 22 May 1947
On 22 October 1946 in the Corfu Strait, two British destroyers struck mines in Albanian waters and suffered
damage, including serious loss of life. On 22 May 1947, the Government of the United Kingdom filed an
Application instituting proceedings against the Government of the People's Republic of Albania seeking a decision
to the effect that the Albanian Government was internationally responsible for the consequences of the incident and
must make reparation or pay compensation. Albania, for its part, had submitted a counter-claim against the United
Kingdom for having violated Albanian territorial waters. On 9 April 1949, the Court found that Albania was
responsible for the explosions and for the resulting damage and loss of human life suffered by the United Kingdom.
The Court also found that the later minesweeping by the United Kingdom had violated Albanian sovereignty. On 19
December 1949, the Court ordered Albania to pay the United Kingdom a total compensation of 843, 947.
Nicaragua v. United States in the International Court
of Justice: Compulsory Jurisdiction or Just
On April 9, 1984, the Republic of Nicaragua submitted a complaint to the
International Court of Justice (IC]), alleging that the United States was using
military force against Nicaragua in violation of internationallaw.1 Three days
earlier, however, the United States had notified the Secretary-General of the
United Nations that its 1946 declaration of consent to the compulsory jurisdiction
of the IC]2 would not apply to disputes with any Central American state.3 In
a statement issued on May 10, 1984, the IC] indicated that the case would
proceed in two separate stages.4 First, the Court would consider the admissibility
of the Nicaraguan application and determine whether it had jurisdiction to hear
the case.5 Then, if there was in fact jurisdiction, the Court in a second proceeding
would consider the merits of the case.6
On November 26, 1984, the IC] completed the initial stage of the proceedings
by deciding the admissibility and jurisdictional issues in the Case Concerning
Military and Paramilitary Activities in and Against Nicaragua (Paramilitary Activities).7

Despite the contention by the United States that it would not be subject to the
Court's jurisdiction, the IC] declared that the application was admissible and that
the Court had jurisdiction to hear the case.8 This was an unprecedented departure
from the well established legal principles governing the IC]'s jurisdiction
that had been nurtured for decades.9 In this single dramatic move, the IC] had
stretched its basis for jurisdiction far beyond the limits upon which it had
historically relied. 10
In its judgment, the IC] discussed the validity of the declarations of consent to
the compulsory jurisdiction of the Court made by both the United States and
NicaraguaY Such declarations, made pursuant to Article 36(2) of the Statute of
the Court,12 are necessary to enable the Court to invoke its compulsory jurisdiction
over a state. 13 The judgment also described the operation of Article 36(5) of
the Statute of the Court, which made declarations of consent to the Permanent
Court of International Justice (PCI]), the predecessor of the IC], applicable to
the IC] .14 The decision further addressed the issue of the validity of reservations
to the consent of a state to the Court's compulsory jurisdictionY In addition, the
Court determined the effect of an attempt to modify a declaration of consentl6
and discussed the possible additional basis of jurisdiction by virtue of a 1956
Treaty of Friendship, Commerce, and Navigation between the United States and
Nicaragua. 17
The issues raised in the ICj's judgment of November 26, 1984, strike not only
at the purpose and effectiveness of the IC], but also at international law itself,
which is fundamentally and necessarily based on the good faith cooperation of
sovereign states. IS The purpose of this Comment is to review the judgment of the
Court in Paramilitary Activities, both within the context of the historical treatment
of jurisdictional issues by the Court and under the various theories which have
arisen in regard to the consent to jurisdiction.19
OVERVIEW OF Nicaragua v. United States
The Nicaraguan application to the IC] indicated that Nicaragua intended to
rely on the compulsory jurisdiction of the IC] under Article 36(2) of the Statute
of the Court.20 In order for the Court to exercise jurisdiction under that provision,
both parties must have accepted the compulsory jurisdiction of the IC]."!
While it was not contested that the United States had accepted the jurisdiction of
the IC] by virtue of the U.S. Declaration of Consent of 1946,22 the United States
maintained that Nicaragua had not accepted the same obligation.23 Nicaragua conceded
that it had never submitted a declaration of consent to the jurisdiction
of the IC], but asserted that Article 36(5) of the Statute of the Court made its
declaration of consent to the jurisdiction of the PCI] valid as to the ICJ.24 The
Court agreed with Nicaragua, rejecting the U.S. argument that Article 36(5) did
not apply since Nicaragua's declaration had never been binding under the
PCIJ.25 Furthermore, the Court stated that even if Article 36(5) was not applicable,
the conduct of the parties and notations in the Yearbooks of the IC] were
enough to imply consent under Article 36(2).26
After submitting its original application, Nicaragua added an additional basis
of jurisdiction for the Court to consider.27 Nicaragua claimed a complementary
basis of jurisdiction under a 1956 Treaty of Friendship, Commerce and Navigation
signed by both the United States and Nicaragua.28 The Court agreed that
this was an additional basis for jurisdiction.29 The judgment went on to reject the
U.S. contention that jurisdiction was precluded by a letter of modification deposited
with 'the Court prior to the filing of Nicaragua's application.30 Finally, the
Court refused to allow the the U.S. reservation to consent to jurisdiction for
matters involving multilateral treaties to operate to prevent the Court from
exercising jurisidction.31

In deciding that it had jurisdiction to hear the Paramilitary Activities case, the
IC] departed from the well settled approach of prior cases of both the PCI] and
IC], which indicate that the overriding considerations in determining the jurisdiction
had been a state's actual consent to jurisdiction as well as judicial restraint.
Article 36 of the Statute of the IC], the primary jurisdictional provIsIOn,
generally provides that the Court shall have jurisdiction to decide disputes
brought before it by states in matters of international law.88 The question of
voluntary versus compulsory jurisdiction, first addressed at the time of the
formation of the PCI], arose again in determining the jurisdiction of the ICJ.89
Reflecting the consensual nature of international law and the desires of the states
involved to reach a compromise, Article 36(2) was written into the Statute of the
ICJ.90 Under this provision, which became known as the Optional Clause, the
Court may exercise compulsory jurisdiction only over those states which have
consented.91 The wording of this clause is almost identical to the jurisdictional
provision which preceded it in the Statute for the PCIJ.9" To encourage states to
consent to the Court's compulsory jurisdiction under the Optional Clause, certain
reservations to a state's consent were permitted by Article 36(3) of the IC]

Table of Contents
Interpretation of the Aramco Concession Agreement.[...]" E. The legal nature of the Onassis Agreement.
Parties: Claimant: Saudi Arabia / Defendant: Arabian American Oil Company
Arbitrators: Sauser-Hall, Referee; Badawi/Hassan,1 Habachy, Arbitrators.)

This was an arbitration2 relating to the Interpretation of a concession agreement made an May 29, 1933, between the
Government of the State of Saudi Arabia and the Standard Oil Company of California. The agreement was
subsequently assigned to the California Arabian Standard Oil Company, which later changed its name to the Arabian
American Oil Company (for convenience called "Aramco "). On January 2o, 1954 the Government of Saudi Arabia
concluded an agreement with Mr. A. S. Onassis and his company, Saudi Arabian Maritime Tankers Ltd. (for
convenience called " Satco "), by Articles IV and XV of which the Company was given a thirty years' " right of
priority " for the transport of Saudi Arab oil. Briefly, the point at issue in the present dispute was the conflict
between those provisions and the agreement with Aramco, which gave the latter the exclusive right to transport the
oil which it had extracted from its concession area in Saudi Arabia.
The law."C. Interpretation of the Aramco Concession Agreement.
" The central point of the dispute submitted to the Arbitration Tribunal is to determine what rights were conferred
upon the Company by the Aramco Concession Agreement, since the Government contends that the exclusive right
of transportation by sea was not included within the expectations of the Parties as no express Stipulation to that
effect is to be found in the Agreement. In its Final Memorial (No. 17, p. 17), the Government states that this
question is of the highest importance. The question is thus, in the first place, one of Interpretation of the Concession.

"Although the Concession Agreement is connected which the Hanbali school of Moslem law, as applied in Saudi
Arabia-from which it derives its validity and effectiveness-the Interpretation of this Agreement should not be based
an that law alone. The Interpretation of contracts is not governed by rigid rules; it is rather an art, governed by
principles of logic and common Sense, which purports to lead to an adaptation, as reasonable as possible, of the
provisions of a contract to the facts of a dispute.
" The Interpretation of juridical acts is not made according to the same methods as the interpretation of Statutes and
is more difficult, for it does not aim merely at specifying the meaning of general and abstract principles laid down
by the legislator, but at ascertaining what was the common Intention of the Parties at the time their agreement was
signed; this is done by an examination of the terms they used and also of their conduct which in Business practices
equivalent to a manifestation of will, and even sometimes of their silence. It should also be kept in mind that
declarations of will seldom specify completely what legal effects the agreement is supposed to have. They are left
for the Judge to discover; he must determine the exact scope of the contractual Situation of the Parties. Experience
shows that, in Business, the exhaustive character of the provisions of a contract is always sacrificed to the practical
and immediate necessities contemplated by the Parties.
" Most modern Codes contain very succinct rules an the Interpretation of contracts. Problems of Interpretation are
solved mainly by using methods, evolved by doctrinal writings, which are the Same in all the legal Systems of the
" The opinions submitted by both Parties are in agreement an this point. In its Final Memorial (No. 20, p. i9) the
Government admits that Moslem principles of Interpretation are the Same as those which are recognized in other
laws and in international law. The same view is held by Aramco (Memorial, Nos. zi3-y, pp. 58-59). It is true that the
Government (Memorial, Appendix I, No. i3, p. 6 and No. 27, pp. zq-z5) points out that, in the Hanbali school of
Moslem law, methods of Interpretation are more simplified. One of the fundamental principles followed by doctors
of Moslem law provides that generic terms must be interpreted extensively and that they must be given the general
purport implied in their generality, unless they are restricted by a special qualification limiting their scope and
calling for restrictive interpretation. But this principle of interpretation is not absolute. It is dominated, just as in
other Iega1 Systems, by the principle that, while looking for the common Intention of the Parties, the declared
Intention should prevail, and that the meaning of the contract is to be found in the context of the agreement,
including a consideration of all the terms used by the Parties for they constitute a whole. Methods of Interpretation
of juridical acts have no absolute character. Those methods which must be used vary from case to case according to
the circumstances of each dispute. The Interpreter must be guided by the principle of good faith. He must remember
that the Parties intended by their agreements to establish a reasonable contractual Situation, in conformity with the
common aim they had in view.
" The starting point of any process of Interpretation is the text agreed upon by the Parties. Obviously, the essence of
a contract is to be found in the concordant will of the Parties; without such harmony in the terms, no rights, no
obligations could result. In the art of Interpretation of texts, the written word comes first. It must be consulted and
accepted in the first place, and the words used by the Parties must be given their natural meaning. As was pointed
out by Vattel, ' when an act is conceived in clear and precise terms, when its meaning is manifest and does not lead
to any absurd result, there is no reason to reject the natural meaning of the text. To look elsewhere for conjectures in
Order to restrict or to extend this meaning, is tantamount to evading it'. (The Law of Nations, Book I, chap. XVII,
Paragraph 263.) Numerous applications of this principle are to be found in the decisions of international tribunals. In
its Advisory Opinion of August 12th, 1922, concerning the interpretation of Part XIII of the Treaty of Versailles
(Competence of the International Labour 0rganization and International Regulation of Agricultural Labour
Conditions), the Permanent Court of International justice stated:

" ' The question in every case must resolve itself into what the terms of the Treaty actually mean.' (P.C.I.J., Series B,
Nos. 2 and 3, p. 23.)1 In its Advisory Opinion of September 15th, 1923, an the Interpretation of Article 4 of the
Polish Minorities Treaty of 28 June, 1919 (Acquisition of Polish Nationality case), the same Court said:
" ' The Courts task is clearly defined. Having before it a clause which leaves little to be desired in the nature of
clearness, it is bound to apply this clause as it stands, without considering whether other provisions might with
advantage have been added to or substituted for it.' (P.C.I.J., Series B, No. 7, p. 2o.)
" The Government did not fail to question the exactitude of this maxim, pointing out that it rests upon a petitio
principii since, before deciding that no Interpretation should be made, one must first demonstrate that no
Interpretation is necessary. Such criticism is obviously baseless whenever one of the Parties, confronted with a clear
text, alleges that it is ambiguous simply because it is embarrassing, and seeks to have it say what it does not. If, an
the other hand, each Party is convinced, in good faith, that the Interpretation suggested by the other is not exact,
Vattel's maxim does no longer suffice for the solution of the dispute, and recourse must be had to all the means of
Interpretation of legal acts. Such is particularly the case when the contracting Parties did not contemplate, at the time
of concluding the agreement, some question which arose at a later date.
" In the dispute under consideration, the Tribunal has pleasure in noting that the good faith of both Parties is
unquestioned; this results from the 6th ' Whereas ' clause of the Preamble of the Arbitration Agreement, where the
Parties recognize the full validity of the 1933 Concession Agreement, and from the oral hearings where it was
repeatedly stated an behalf of the Government that H.M. the King mainly expected this Tribunal to give such
directions as were necessary for His Government to act rightly and justly. The apparent or supposed clearness of the
provisions of the Concession Agreement is therefore no reason to refrain from resorting to legal interpretation in
order to ascertain the exact meaning of the true scope of the terms used by the Parties.
" Such interpretation becomes especially needed when as is the case here, the Tribunal is confronted with a contract
written in two languages, Arabic and English, and when the Parties have not provided in a complete manner that one
text only shall be authoritative.
"Article 1 of the Concession Agreement of 1933 reads as follows:
" ' The Government hereby grants to the Company an the terms and conditions hereinafter mentioned, and with
respect to the area defined below, the exclusive right, for a period of sixty years from the effective date hereof to
explore, prospect, drill for, extract, treat, manufacture, transport, deal with carry away and export Petroleum asphalt,
naphtha natural greases, ozokerite and other hydrocarbons and the derivatives of all such products. It is understood,
however, that such right does not include the exclusive right to sell crude or refined products within the area
described below or within Saudi Arabia.' (Emphasis added.)
" The word ' exclusive ' is rendered in the Arabic text by the term ' mutlaq ', which means ' absolute ', according to
both Parties. These: two expressions are not entirely synonymous in legal science.
" Exclusive rights are rights which belong only to their holder, so that they purport to exclude the competition of
other persons. When the grantor gives an exclusive right to a concessionaire, he undertakes a (negative) Obligation
not to do [something], namely an Obligation not to exercise himself, directly or indirectly, the right he had granted.
In the case of a State, this Obligation consists in not allowing any other Person to exercise the Same right in the

same manner and during the Same period. Aramco's exclusive right has thus the character of a limited monopoly,
granted to a private Company, for a fixed period of time, which respect to specified products and a definite area.
"Absolute rights are rights which the holder can oppose to all other persons, in contradistinction to relative rights,
which are related to the obligations of specified persons only. The term ' mutlaq ' in Moslem law means, just as in
European legal systems, an absolute right in contrast with a ' relative ' right, as a relation between creditor and
debtor. The absolute right imposes upon all persons a (negative) Obligation to abstain ; everybody has the duty not
to disturb the holder of an absolute right in the legitimate exercise of his right.
" When reference is made to these notions of exclusive right and of absolute right (mutlaq) granted to the Company,
the two texts must be recognized as equivalent. If a Government confers exclusive rights upon a Corporation, it
undertakes not to permit others to exercise these rights, a fact which turns them into absolute rights as regards third
persons. The rights granted in this way to the concessionaires correspond, in the Tribunals opinion, to the guarantees
necessary to the Company so that it should not incur the risk of being partially deprived of the fruits of its labour,
efforts and large capital Investments by the competition of other persons, or even of the State itself. The two texts
may be reconciled by this Interpretation. This controversy about the meaning of the words ' exclusive ' and ' mutlaq
', it may be added, is of no consequence for the solution of the dispute, since what is in issue is the content of the '
exclusive' or ' mutlaq ' right granted to the Company.
" The exclusive right granted to the Company by Article 1 of the Concession is a global right, which contains several
particular rights indicated by the Parties in an order following roughly the ordinary steps of oil production and sale,
from its extraction in Saudi Arabia to its exportation, marketing and sale abroad. Aramco's exclusive right covers all
those granted rights, which constitute a whole.
" The Government contests this point of view. While admitting that the Company has the right to engage in all the
operations mentioned in Article 1, the -Government excludes therefrom transportation by sea because there is no
proof, in its opinion, that it ever intended to make such a grant, which would entail a sacrifice of its sovereign rights.
The Government maintains that the Company has never claimed, before the present dispute arose, an exclusive right
of transport by sea and that in fact it never engaged in this kind of transport, for it neither owns nor charters any
tankers and has nearly always left it to its buyers to transport the oil it produces and sells. In the Government's view,
the Concession Agreement purports to authorize the Company to explore areas supposed to contain oil deposits, and,
in case of discovery, to extract and produce the oil, but not to transport it by sea.
"Aramco's exclusive right, when viewed as a whole, corresponds to the integral activity of a company operating an
oil concession, and this activity may be divided, under Article 1, into the following four stages. The Company has
the exclusive right:
- first, to search for petroleum; this is expressed by the words explore and prospect;
- second, to extract oil; this is rendered by the words: drill for and extract;
- third, to refine petroleum and produce its derivatives; this is expressed by the words: treat and manufacture;
- fourth and last, to transport petroleum, to sell it abroad and to dispose of it commercially; these activities are
described by the words: transport, deal with, carry away and export.
" This exclusive right is granted to the Company in respect of a very wide area of Saudi Arabia which is defined in
Article 2 of the Principal Agreement, Article 5 of the Supplemental Agreement, and paragraph 4. of the Offshore

Agreement. The extent of this Concession is not at issue between the Parties. It is especially provided in Article , last
sentence, of the 1933 Agreement, that the Company's right does not include the exclusive right to sell crude or
refined products within the Concession area or outside this area within Saudi Arabia.
" This description of the Company's exclusive right would be incomplete without a reference to Article 22, which
provides that, as a natural consequence of such right:
' It is understood, of course, that the Company has the right to use all means and facilities it may deem necessary or
advisable in order to exercise the rights granted under this contract so as to carry out the purpose of this enterprise,
including, among other things the right . . .
Then follows a lengthy enumeration of the actions which the Company is entitled to take, with the sole exclusion of
the use of aeroplanes within the country. This list is neither exhaustive nor limitative; it mentions mere examples, as
shown by the words ' among other things '. It follows that the Company has the exclusive right to carry on all
activities, in all forms, which relate to the oil industry with respect to the Concession area.
" The Government does not dispute Aramco's exclusive right with regard to the first three categories of activities
mentioned above. It contends, however, that the exclusive right to transport oil and its products by sea is not
included therein, and that Aramco is not entitled to arrange, by agreement with its buyers, the modalities of maritime
transport of oil without due regard to the legislation of Saudi Arabia, even if such legislation were enacted after the
conclusion of Aramco's Concession Agreement.
" The Government relies an the fact that Article 1 of the Principal Agreement does not expressly mention the right to
ship as being included in the Concessionaire's exclusive right and that, consequently, such right is not one of the
rights granted in the Concession. Under the Concession, Aramco is said to have a right to transport only within the
limits fixed for the exercise of its exclusive right. This viewpoint is clearly set forth in the letter of the Minister of
Finance of Saudi Arabia of 10 July 1954, corresponding to 9 Zul Quada 1373, where the Government, while
recognizing Aramco's right to export for its own account, states:
" ' However, it was not the subject of the Agreement or the purpose of the enterprise that the Government of His
Majesty the King grant the Company any concession or monopoly for the commercial transport, internal or external,
of any of the products of the country.'
No such distinction is to be found in the Concession; the silence of the Parties an this point was intentional and it is
significant, for sales abroad are, and always have been, of decisive importance for Aramco. No distinction was ever
made between the so-called commercial and non-commercial transport. Moreover, no dispute has ever arisen
between the Government and Aramco with regard to transportation by land, internal or external, of oil and its
products. This is shown by the regular functioning of pipe-line transport across the territories of Saudi Arabia and of
several other States to Sidon. The dispute is strictly confined to the right of transportation by sea and, during the
arbitral proceedings, no other means of transport, commercial or non-commercial, was discussed.
" Relying upon the order of the verbs which, in Article 1 of the Concession, successively describe the various phases
of oil development, the Government endeavours to ascribe to each operation a limited territorial domain in order to
demonstrate that none of these operations can relate to the high seas and that, therefore, maritime transport cannot be
included in the concessionaire's exclusive right.
" According to this argument, petroleum must, after extraction, be treated, that is to say, be submitted to a process of
elimination of natural gas, sulphur, water and other foreign substances which it contains. This operation must be

effected an the spot. The same is true of the process expressed by the term ' manufacture ', which is said to consist in
obtaining crude oil-a fact which explains, in the Government's opinion, that the. two verbs ' to treat ' and ' to
manufacture ' precede the verb ' to transport ' in Article 1. The term ' to transport ' thus concerns only, it is alleged,
transport from the site of extraction, either to the Port of loading or to the Ras Tanura refinery, where oil products,
asphalt, naphtha, ozokerite and other hydrocarbons and their derivatives are manufactured; it would follow that the
word ' transport ' cannot mean external transport, outside the limits of Saudi Arabia, and can only signify internal
transport, from the oil wells to a point of arrival also situated in Saudi Arabia. The term 'deal with ', which follows
the word ' transport ', is said to mean, in the technical sequence of operations, to submit manufactured products to
further processing at the buyers' special request, or to other material operations, and to manipulations consisting, for
instance, in putting the oil into barrels so that these products may be disposed of and carried away. All these
operations must necessarily take place in Saudi Arabia. When all of them have been carried out, petroleum and its
various products must be removed from the place in which they have been obtained and taken to the place of final
departure, from which they will then be exported abroad. The place occupied by the verb ' to transport ' in Article 1,
before the verb ' to export ', so the argument runs, excludes the possibility of its meaning 'to transport to foreign
countries ' ; inasmuch as it is mentioned, an the contrary, before the reference to the operations described by the verb
' to deal with ', it concerns only transportation within the Concession area, before exportation. As for the exclusive
right to export, it has no other meaning, it is further contended, than that of the grant to Aramco of an export licence
for its oil and its products.
" The Arbitration Tribunal feels unable to adopt such an argumentation without straining the meaning of the texts in
a strange manner and overlooking the respective positions of the Parties at the time the contract was signed. It is true
that the sequence of the verbs in Article I follows the general order of the operations of an oil company. But it is
certain that the Parties cannot have intended to ascribe to each of the verbs they used a specific territorial meaning.
This would have been contrary both to common Sense and to the technical requirements of the proposed industrial
operations. The production of crude oil is not a result of its ' manufacture ', as was shown at some length in Aramco's
Final Memorial (No. 466-477, pp. 225-228) ; it follows that the manufacturing process cannot be localized at the
place where oil is extracted. The terms 'treat' and 'manufacture' relate to the refining of Petroleum in the Port of Ras
Tanura. Moreover one of the modalities of oil development consists in sending crude oil abroad, to consuming
countries, where it is refined outside Saudi Arabia; in such a case the term ' transport ' necessarily implies sending
oil abroad, either by land or by sea. The term 'deal with'-which will be the subject of further comment-does not refer
to physical handling but to the conclusion of contracts which, in fact, are not concluded or performed solely within
the Concession area, and, in law, cannot be limited territorially.
" The Tribunal holds that the terms used in Article 1 of the Concession Agreement to indicate the content of
Aramco's exclusive right must be understood in their plain, ordinary and usual Sense, which is the sense accepted in
the oil industry. They are general terms which are not qualified in such a manner as to make it necessary to localize
each of them in a particular manner.
"A certain redundancy is to be found, in accordance with a tradition which has been known for centuries in legal
terminology, in the verbs which describe the various phases of the Operation of an oil Concession. The terms are
interrelated in such a way as to make it impossible sometimes to separate them by a logical process. The verbs 'to
treat' and 'to manufacture' are complementary and cover the same operations. The same is true of the verbs 'to
transport', 'to deal with', 'to carry away' and 'to export'. These expressions, which are linked economically, partly
cover the same ideal and are intended to be complementary to each other- they are used by jurists in order to give
the greatest possible width to the wording they finally adopt.

" When the Position of the Parties at the date the contract was signed is borne in mind, it can hardly be doubted that
Aramco was granted rights to a complete and integral operation. The interest of both Parties and the success of the
enterprise contemplated by them depended on it.
"A Government desirous to exploit the possible resources of its subsoil as yet unexplored was in contact with an
experienced Corporation, prepared to run the enormous risks of an enterprise whose result could not be foretold.
Both were conscious of the fact that success depended, not only upon the discovery of oil deposits, but also and
chiefly upon the sale of oil and its products to foreign countries, since demand for oil in Saudi Arabia was
negligible. They were aware of the necessity, to this end, of giving the concessionaire freedom to arrange
transportation abroad according to methods which had already been put to the test, without Government
interference. Their expectations and their activities proved fruitful; and they led to the outstanding results described
above in the Facts.
" These remarkable results are due to the company's exclusive right, namely, a right-which excluded all competitionto transport, deal with, carry away and export petroleum and its products.
" 1. The exclusive right to ' transport ' means, as is shown by its latin etymology, to carry beyond, persons or things,
i.e., from one place to another-whatever the distance between them. It does not imply any special means of
transportation. Consequently, it can apply to land, water or sea transport. It does not necessitate, either, the use of
particular methods of transportation and, in connection with the oil business, the methods adopted by the oil industry
cannot be ignored.
"According to a principle generally followed in the interpretation of concessions, any restriction an the rights
granted by a general clause must be expressed in a clear and unequivocal manner if it is to be invoked against the
concessionaire. This was done in Article 22, in the last sentence of its first paragraph, in order to exclude
transportation by air and to reserve to a separate agreement the question of the use of aeroplanes within the country.
Consequently, sea transport is not excluded by the mere absence in Article 1 of the expression ' maritime ' or of some
similar term. Likewise the terms 'by land' or 'across the territorial waters' are not found in the text and yet these
kinds of transportation are not disputed by the Government.
" The exclusive character of the right of transportation is not limited to the Concession area defined by Article 2 of
the 1933 Concession Agreement, by Article 5 of the 1939 Supplemental Agreement, and by the 1948 Offshore
Agreement. Article 1 of the Aramco Concession Agreement expressly grants to the concessionaire an exclusive right
' with respect to the area ' defined in Article 2, and not only 'within' the limits of Saudi Arabia. The terms used
correspond completely to the intention of the Parties, for it would have been illogical to confer upon the Company
the right to transport and to export within the Concession area. It is impossible to admit that the Parties have
disregarded the principle of non-contradiction to such an extent ; to assume this would amount to straining the sense
of terms so adequate to the situation which the Parties meant to regulate. In the opinion of the Government itself,
this situation was to imply the free flow of oil to foreign markets where large amounts were in demand. It is in the
nature of this exclusive right to transport that its exercise, begun in the exclusive area, should be carried an outside
this area, for it cannot be bound by geographical limits. This is manifest in the case of the transportation of oil by
pipeline. Having begun within the Concession area in Saudi Arabia, it is continued, necessarily, and by virtue of
special arrangements made by the Trans-Arabian Pipeline Company, in other countries, namely, Jordan, Syria and
Lebanon. This is true also of transport because, if it had been limited to the extent of the Concession area, it would
have meant nothing more than the right to use coasting-vessels, which would be useless to Aramco.
" In addition to the territories situated in the Eastern part of Saudi Arabia, whose limits are indicated in Article 2 of
the Concession, this area includes the islands and territorial waters along the coast of the Persian Gulf. Article 5 of

the Supplemental Agreement of 31 May 1939, corresponding to 12 Rabie al Thani 1358, confirms that the maritime
domain is included in the Concession area. That Article refers to 'all lands, islands, waters, territories and interests
included in Article 2 of the Saudi Arab Concession' and to the territories known as the 'Saudi Arab-Kuwait Neutral
Zone' and the 'Saudi Arab-Iraq Neutral Zone', territories in which the Government has, or will have, rights, titles and
interests of a territorial or maritime nature. This Agreement contains the following words: "
'And the Saudi Arab Concession shall be and is hereby modified to include all the lands, islands, waters, territories
and interests of the Government described and referred to in the foregoing provisions of this Article and henceforth
the Saudi Arab Concession as modified by the Second Principal Agreement and by this Agreement shall be read
accordingly. And, for convenience, all such lands, islands, waters, territories and interests may be referred to as the "
exclusive area "
" The Offshore Agreement of 1o October 1948 extended even further the Concession area; it provided that all the
waters of the Persian Gulf over which the Government of Saudi Arabia had, or claimed, or might later claim during
the Concession period, dominion or ownership or an interest of any kind whatsoever, are included in the Concession.
The last sentence of No. 4 of this Agreement reads as follows:
" 'Government agrees that Aramco's exclusive right described in Article I of the Convention of 29 May 1933 . . .
applies to the whole of the offshore area as herein defined and Government further agrees that the Exclusive Area of
Aramco's Concession as described in Article 2 of the Convention of 29 May 1933 and in Article 5 (a) of the
Supplemental Agreement of 31 May 1939 extends to the whole of the offshore area as herein defined.' "
Aramco's exclusive right to transport, therefore, is not purely terrestrial, but also maritime, and it extends not only to
the territorial waters of Saudi Arabia but even to those waters which are legally included in the high seas and cover
the sea-bed and submarine areas contiguous to the coasts of Saudi Arabia and subject to the jurisdiction and control
of that State by virtue of the Royal Pronouncement of 28 May 1949, corresponding to I Shaaban 1368. Under this
Pronouncement the boundaries of the offshore area have not been fixed. They can only be determined, in accordance
with equitable principles, by agreements with the neighbouring States, whose sea-bed and subsoil adjoin the
offshore area of Saudi Arabia. The Pronouncement ends by stating that the character as high seas of such areas and
the right to the free and unimpeded navigation in such waters and the air space above those waters are in no way
" The Government contends, however, that the exclusive right to transport oil is limited to the territorial waters and
does not confer upon Aramco the right to cross the maritime frontiers of Saudi Arabia. In other words, Aramco is
said to possess an exclusive right of transportation by sea within the exclusive area, but only up to the boundaries of
Saudi Arab territorial waters in the Persian Gulf where the high seas begin. The Government considers it
inadmissible that 'the Company could transport the oil without competition up to the limits of the territorial sea and
then slip across the boundary to the high sea'. According to its point of view, the right to transport within that part of
the exclusive area which includes parts of the high seas does not relate to transportation to foreign countries, but
only to transportation to Saudi Arab ports where oil is to be manufactured or from where it is to be exported. This is
because the Concession was extended to offshore waters only for the purpose of drilling operations, extraction and
production in the sea-bed included in the offshore area. The right of transportation across the boundary of the
territorial waters is thus alleged to have been granted to the concessionaire in one direction only, i.e., in order to
reach Saudi Arabia, and not in order to take its oil and products away from Saudi Arabia.
" The Arbitration Tribunal is unable to admit these objections. They are not supported at all by the various texts
which constitute the Concession and they overlook the practical utility for Aramco to transport its crude oil extracted
outside the territorial waters of Saudi Arabia directly from the site of extraction to foreign consuming countries. On

the contrary, it follows expressly from the 7948 Offshore Agreement that Aramco enjoys an exclusive right to
transport, not only within the territorial waters, but also across the boundary which separates these waters from the
high seas. Several proofs of this conclusion can be found in the documents submitted to the Tribunal. For instance,
Article 9 of the 1933 Agreement stipulates that Aramco may relinquish to the Government such portions of the
exclusive area as it decides not to explore further, while continuing to enjoy the right to use those portions for
transportation. Article 7 of the 1939 Supplemental Agreement provides that, if the portions so relinquished are
within the territorial waters, the Company will continue to have the right to use them for transportation; the same is
true under Articles 2 and 6 of the Offshore Agreement of 10 October 1948 if the portions so relinquished are within
the territorial waters or within the offshore area. The Company has thus the right to cross freely the maritime frontier
of the State for its transportation and its export of oil.
" The Government has granted to the Company all the rights of exclusive transport by sea that it could grant with
respect to its maritime domain, the high seas being free and not subject to its sovereignty.
" It may be added that the Government does not deny that the Concession Agreement may contain implied rights in
the concessionaire's favour, if this is necessary to give the contract all its efficacy. This is mentioned an several
occasions in the Final Memorial of the Government, which admits that 'a term may properly be implied in favour of
the Company to the effect that the Government would not itself unreasonably interfere with the Company's
exclusive right to export i.e., sell to foreign buyers the oil and other products produced by Aramco or render that
impracticable' (No. 39, p 42).
" In an enterprise of world-wide importance, whose success is entirely dependent an the flow of oil and oil products
to foreign markets, it is impossible to imagine that the Parties would have wanted to give the concessionaire an
exclusive right to transport restricted to the territorial waters while denying this right as regards transportation
overseas, which is the only kind of transportation which is of real interest to the concessionaire. Saudi Arabia has
granted Aramco an exclusive right to transport with respect to all that portion of its maritime domain which is
included in the Concession. It would be illogical to infer, a contrario, from this that no authorization has been given
with regard to transport which implies crossing the frontier and entering the free domain of the high seas. This
argumentation would lead to the conclusion that nobody has the right to transport oil overseas. Third Parties could
not do it since they would have to cross first that portion of the territorial sea within the Concession area where the
Company has the exclusive right to transport its products ; and the Company itself could not do it either, owing to
the attempted prohibition by the Government concerning transportation across its maritime frontier.
" The legal construction resorted to by the Government appears therefore to be contrary to the nature of things, to the
needs of commerce, to the real intention of the Parties, as well as to the very wording of the various Agreements
pertaining to the Concession, in which no trace can be found of a distinction between internal and external transport.
" 2. The exclusive right to 'deal with' has been the subject of much controversy between the Parties. According to
Aramco, it means to treat commercially, to make arrangements, to engage in all sorts of commercial operations ; this
meaning would authorize the Company to conclude any kind of commercial agreements with its buyers and to
determine in this way the conditions of the sale, of the delivery and of the transport of its oil and oil products.
" According to the New English Dictionary (Oxford), the expression 'deal with' means 'to act in regard to,
administer, handle, dispose in any way (of a thing) ; to handle effectively, to grapple with, to take successful action
in regard to' ; according to the New International Dictionary of Webster, this term means' to handle or treat so as to
dispose of or manage adequately; to do a distributing or retailing business, to traffic, to trade' ; both works
emphasize that the verb 'to deal' should be followed by the preposition 'with' when its complement is a person, and

by 'in' when a thing is concerned-a distinction which is not rigorously observed, it may be noted, by the two
Dictionaries just quoted.
" Assuming that there were a linguistic inaccuracy in the English text of Article 1 of the Concession Agreement,
since the verb 'to deal with' is related to things like oil and its derivatives, and not to persons, the Arabic text should
be consulted. It uses the words, in the said Article I, ' mu'amala al bitrul ' which, it is true, are somewhat misleading
since they may mean 'to treat' ; but this ambiguity disappears when the context is taken into account. It is worth
noting that the words 'mualagat wa son' precede the expression 'mu'amala' ; and they mean undoubtedly treat and
manufacture. It is obvious, therefore, that in the context of Article 1 of the Concession Agreement, the word
'mu'amala' can have no other meaning than 'transaction'. Otherwise the text of the Agreement would contain a
superfluous repetition. Furthermore, the Agreement of the Parties about Aramco's exclusive right to sell oil confirms
that the sense of the word 'mu'amala' is analogous to that ascribed by the Company to the English term 'deal with'. It
may also be recalled that Article 22 of the same Agreement uses the word 'ta'amul', which necessarily connotes a
transaction and thus corroborates the meaning of the word 'mu'amala' used in Article I of the Arabic text of Aramco's
Concession Agreement.
" In the Tribunals opinion, the sense of the Arabic text corresponds to that which, in the business world and
particularly in the oil industry, is ascribed to the verb 'deal with'-one of the most general terms to be found in the
English language to indicate the powers of a person over his property. This interpretation is consistent with the
powers which the Parties have agreed to confer upon Aramco so that the Company may take all measures it thinks
fit to send and to sell its oil overseas at the terms it deems necessary or advisable.
" This interpretation is inescapable from a practical point of view; whether the Company has the exclusive right to
conclude any kind of contracts for the delivery and the transportation of oil with persons, or whether it has only the
right to handle its oil materially, the moment always comes, in the execution of these operations, when the Company
has to deliver the oil. This requires some manipulations, for instance the pumping of oil into the tankers; and the
Company will be bound legally to make these deliveries only as regards buyers with whom it will have concluded
commercial arrangements and fixed the conditions of sale, which may contain the c.i.f. or the f.o.b. clauses used in
maritime commerce. It is recognized by both Parties that the Company has the exclusive right to make such
" 3. The concessionary Company has also, under Article 1, the exclusive right to carry away its petroleum and its
products. The term is unambiguous and the Arbitration Tribunal can adopt the meaning given to it by both Parties,
namely-as regards Aramco's oil and products-to take a thing (or a person) to a certain distance from the point of
departure, it being understood that the point of arrival can be anywhere in Saudi Arabia or abroad.
" 4. The last exclusive right granted to the Company is the right to export, and its meaning is disputed by the Parties.
Aramco, relying upon the Dictionary of Littr, contends that it means 'to transport to a foreign country products of
the soil or of the national industry' ; it implies the material and physical transportation of goods to other countries
and it includes all the modes of execution of this transport; the exporter is in no way limited in the means of
exportation which he intends to use; when he has an exclusive right, he is not bound to effect this transportation
himself; he can employ any method of export which he deems advisable and, since the Concession Agreement does
not restrict in any way the concessionaire's rights in this respect, the word 'to export' should be given its full and
complete meaning, which corresponds to the definition given in the Saudi Arabian Customs Law and Regulations of
1951 as follows:

" 'To "export" means to take or send an imported or domestic article destined for a foreign country beyond the
territorial jurisdiction of the Kingdom of Saudi Arabia.' (Part 2, General Rules, p. 17, section 202, sub-paragraph
" The Government has vigorously contested this Interpretation of the Agreement. It relies an Webster's Dictionary,
according to which ' to export ' means ' to carry 0r send abroad, especially to foreign countries, as merchandise or
commodities in the way of commerce', and an similar definitions given in several other English, French and Swiss
dictionaries, and gives to this verb the more restrictive sense of sending goods from one country to another, without
the exporter being necessarily the transporter. It concludes therefrom that Aramco's exclusive right to export
amounts to nothing more, in fact, than to the right to obtain an export licence without unreasonable interference
from the Government. The exclusive right to export is said to confer upon Aramco, and upon no one else, the right
to sell and to send its oil and derivatives overseas, but no privilege whatever in the matter of exportation by sea which is a distinct enterprise, as pointed out by the Minister of Finance in his letter of 10 July 1954. The Company
cannot, it is alleged, invoke its exclusive right to export in order to determine by whom, and how, oil and its
derivatives must be transported from Saudi Arabia to foreign countries, for this is a governmental prerogative;
Aramco's only right in this connection is the right to export freely without interference. The Government insists an
the fact that Aramco, moreover, has always exercised its right to export by having recourse to third Parties and has
never owned or chartered itself a single tankship ; its exclusive right to export, it is argued, ends at the time when the
oil has been pumped aboard a tanker.
" The Arbitration Tribunal is unable to accept the contention that the exclusive right to export, which has undeniably
been granted to Aramco, could consist in a mere licence to export. It may be admitted that the term 'to export' refers,
as indicated by the Government, to the sending of goods to foreign countries, and not to their physical transport by
the exporter. But it cannot be overlooked that the right to export is intimately connected, in Article 1 of the
Concession Agreement, with a more general exclusive right, guaranteed to the exporter, which includes the right to
transport, to carry away and to deal with.
" The right to transport by land and by sea implies the right to export; the right to carry away within and from SaudiArabia implies it also; the right to deal with includes the power of arranging the exportation in the manner deemed
most appropriate by the concessionaire, to the greatest advantage and profit of both Parties. The use of the term 'to
export' renders unquestionable the meaning which has been ascribed to the preceding terms. The concessionaire, to
whom the exclusive right to transport and to export has been guaranteed, has obviously the right to transport by
exportation. These operations may be legally distinguishable; but in the present case, they are inseparable.
" In order to appreciate the full significance of the exclusive right granted by Article 1 of the Concession Agreement,
it is necessary not to overlook Article 22. However this Article has only an auxiliary character in relation to Article
1. It does not purport to confer upon Aramco other rights than those already granted in Article 1, but to grant it so far
as necessary all the rights needed in order to facilitate, from a technical point of view, the Operation of the
Concession. These rights are couched in the -widest terms, which merely confirm the Interpretation arrived at by a
grammatical and literal analysis of Article 1. Article 22 gives a detailed, though not exhaustive, commentary of the
rights possessed by the concessionaire. It provides, as a natural consequence ('of course'), that 'the Company has the
right to use all means and facilities it may deem necessary or advisable in order to exercise the rights granted under
this contract, so as to carry out the purposes of this enterprise, including, among other things, the right . . . to use all
forms of transportation . . . of petroleum and its derivatives'. Inasmuch as, prima facie, the Arbitration Tribunal
finds, by interpretation of Article 1, that the concessionary Company has the exclusive right to transport its products
overseas, it must conclude therefrom that the means and facilities mentioned in Article 22 necessarily include all the
means of effecting such maritime transportation. It cannot be disputed that the said Article 22 mainly refers to the
technical and material means which Aramco may freely use in order to exercise its exclusive right of operating the

concession. It contains a reference to the right to construct and use all means of communication, to install machinery
and equipment and all necessary facilities in connection with transport operations, to construct and use reservoirs,
tanks and other receptacles, wharves, piers, sea-loading lines and all other terminal and port facilities, and to use all
forms of transportation of petroleum and its derivatives. These precisions would be useless if they did not
presuppose the right to transport by sea. Moreover, they are cited merely as examples. They would only exclude
other forms of transportation of oil and its derivatives if Article 22 contained a specific reservation to that effect, as
is the case for the use of aeroplanes which is to be the subject of a separate agreement. On the contrary, the same
Article 22 expressly mentions the right of the Company to 'deal with', which is rendered in the Arabic text by 'bi taamul', a term which was interpreted by the Government during the oral hearings as referring to the right to conclude
all transactions such as purchase and sale (Verbatim Transcript, 23rd day, pp. 788-789).
" Even if the Company's rights were restricted to the transactions necessary to effect the technical and material
operations required by the production, manufacture and transportation of oil, the Government's contention would not
be more acceptable. The Government has admitted an several occasions during the written proceedings that a
commercial contract may be implicitly supplemented and that a term may properly be implied if it is necessary in
Order to give the contract business efficacy. Under the Concession Agreement, it has undertaken a (negative)
Obligation to refrain from doing anything which would have the effect of interfering with Aramco's exportation of
oil and oil products; it follows that, even if Article 22 were passed over, the exclusive right granted by Article 1
necessarily implies the right for the concessionaire to conclude all the commercial arrangements needed for export,
and in particular the arrangements which are customary in the international oil business, such as f.o.b. sales. The
Arbitration Tribunal cannot overlook the practices and usages of commerce, known by both Parties at the time the
Agreement was signed, unless it be prepared to content itself with abstract reasoning and to lose sight of reality and
of the requirements of the oil industry.
" The Arbitration Tribunal has been unable to discover in the text of the Concession Agreement any element which
could justify its refusal to recognize Aramco's exclusive right to transport by sea.
" Before making a final decision an this point, the Tribunal feels it to be its duty to examine also the other means of
interpretation which lead the Government to defend the opposite solution. The Government relies mainly upon
interpretation by circumstantial evidence, upon the principle of effectiveness (of the full effect of the essential
purpose), i.e., upon a teleological interpretation of the contract, and upon restrictive interpretation. It also bases its
argument an the rule contra proferentem and an interpretation in favorem debitoris.
" If the natural sense of the terms used by the Parties and the sense which is ordinarily given to them in the oil
industry, as well as their explanation by the context of the Agreements, were to lead to an impossible, or absurd, or
illicit, result, the Tribunal would be bound to look for another interpretation.
" In connection with transportation by sea, the Government notes that it has negotiated with an oil company and not
with a maritime transport company. It notes, further, that, as Aramco never owned a fleet of tankships, the
Government cannot have intended to grant to that Company an exclusive right which the latter was unable to
exercise itself. However, the Arbitration Tribunal is bound to observe that, as soon as oil in commercial quantities
was discovered, the question of its transport by sea by Aramco imperatively arose. Consequently, this question had
necessarily to be taken into account when the 1933 Concession Agreement was concluded. At that time Saudi Arabia
did not possess any tankships and no tankers company existed in the Persian Gulf which could be entrusted by
Aramco with the task of transporting petroleum, if discovered. The responsibility of maritime transport could only
be Aramco's. To this end, Aramco first acquired or chartered a few vessels, barges and tugs in order to transport its
productions to Bahrein across the high seas. When production increased, it chartered the tankship 'Scofield', owned
by Socal, to carry its first cargo of oil to foreign markets. The departure of this tanker was the occasion of an

Impressive celebration in the presence of H.M. the King. This fact emphasizes the importance, in the Government's
view, of establishing connections with overseas markets. Later on, in 1945, the 'Arabian-Bahrein Pipeline ' was
completed and made it possible to transport the oil across the high seas to Bahrein Island; still later, in ig5o, the '
Trans-Arabian Pipeline ' was put into operation. It made possible the transportation of more than 300,ooo barrels of
oil daily to the Mediterranean Sea and from thence to various destinations. Finally, since 1947, the Company
organized this maritime transport by the legal means of the Offtake Agreements.1 All this development, which took
place in order to facilitate connections with the rest of the world, obviously has its starting-point in circumstances
which since the very beginning, exercised a commanding influence upon the Parties and led them to grant to the
concessionaire a right of maritime transport. Since, in the Tribunals opinion, the Parties have recognized from the
start that this right to transport granted to Aramco was vital for the success of the enterprise, the fact that the
Company is not a maritime transport company is irrelevant.
" Teleological interpretation is based upon a consideration of the common and reasonable purpose of the contract at
the time of signing, and not of the particular purpose envisaged separately by each Party. The common aim of all the
Parties to the contract must be ascertained in order to determine the true meaning of the expressions which they have
used. The resulting interpretation will neither be necessarily liberal nor strict; it shall be that interpretation which
results from the actual purpose contemplated by the Parties ever since the beginning of their contractual relationship.
" Considered as a whole, Aramco's Concession is undoubtedly an agreement whose purpose is the production of oil
in Saudi Arabia and its sale in all the markets of the world. Both Parties are in agreement an this point. The
Government aimed at developing the natural resources of the country to the greatest benefit of the national
community. The Company, an its side, made large advances and investments in order to be able to produce and sell
enough petroleum to meet its obligations as concessionaire, to cover its costs, to par the royalties due to the
Government and to earn a profit from its efforts and activities. The common aim was thus, ever since the conclusion
of the contract, to obtain the greatest reward possible from the operation of the enterprise and, to this end, to give to
the concessionaire the complete direction of the enterprise so that it could engage in all the operations deemed by it
advisable or necessary for this common purpose.
"Among these operations, the export, the transport and the sale in foreign countries of the oil and its derivatives are
essential because the demand for oil in Saudi Arabia is far too small to enable an enterprise of Aramco's magnitude
to meet its costs and earn profits, as the country is not industrialized. One of the main and common purposes of the
Concession was thus to establish a permanent and more and more regular connection between producing and
consuming areas. To attain this purpose, Aramco had to be given a wide discretion in organizing the sale of its oil
and in adopting any means of transportation and exportation which it thought advisable and which had long been
adopted in practice by the international oil industry. These means consist, at the present time, in the conclusion of
contracts of sale f.o.b. with buyers who must themselves supply the tankships used to carry away the oil delivered to
them, at Ras Tanura or at Sidon, by pumping aboard the tankships. Aramco alone has the right to order and to
organize these operations-a fact which is recognized an both sides.
" It seems certain that no agreement between the Parties would have been reached, if the concessionary Company
had not been able to obtain the guarantee of an exclusive right of transportation by sea and of exportation of its oil
and products with freedom to exercise its right at its discretion. This exclusive right does not amount to a general
monopoly ; the Company has a monopoly only in so far as petroleum and its derivatives, produced in the
Concession area, are concerned. The Company has never claimed a total monopoly of oil exportation, and its
monopoly in Saudi Arabia was restricted from the day when concessions were granted to other companies outside its
exclusive area. The Company is entitled to exercise its exclusive right to transport in any manner it thinks fit, for
there is no imperative provision in the Concession in this respect. It can do this either physically by means of
tankships owned or chartered by Aramco itself, or legally, in accordance with the international usages of the oil

business, by means of contracts with buyers who take care of the transport and whose legal position will be further
commented upon below.
" The teleological interpretation, i.e., by analysis of the purpose of the contract, fully corroborates, therefore, the
Interpretation already arrived at of Articles I and 22 of the 1933 Concession Agreement.
" The Government has laid much stress upon the principle of restrictive interpretation when, as is the case here, a
State is a party to the contract, and in particular when the contract is a concession, governed by Moslem law as
applied by Saudi Arabia; under this law, a concession can only be granted by the Imam in the interest of the Islamic
community, so that he is never presumed to have limited his right of sovereignty ; an express and unambiguous
proof is necessary, it is contended, to establish the existence of such limitation. The Government relies an a
considerable number of judicial decisions of international tribunals and of international arbitral awards, as well as an
decisions given by the Courts of the United States. A restrictive Interpretation would thus be called for in this case, it
is alleged since the Concession Agreement does not concede expressis verbis the exclusive right of transportation by
" Objecting to this argumentation, Aramco contends that the principle of restrictive Interpretation is obsolete, that
the judicial decisions quoted are irrelevant in the present case and, furthermore that even if the principle were to be
accepted, it Could only be applied when there is some insurmountable doubt about the Intention of the Parties at the
time of concluding the contract. The existence of such a doubt, it is said, must be proved by the Party who invokes
it. This has not been done in casu.
" The Arbitration Tribunal does not believe that the principle of restrictive Interpretation should be considered as
abandoned. As soon as one of the Parties has a doubt regarding the meaning and scope of the contract, in good faithand the Tribunal has already noted that this good faith manifestly results from the 6th ' Whereas ' Clause of the
Preamble of the Arbitration Agreement-all the rules of legal Interpretation may be resorted to. The jurist's art
consists in choosing one or other of these rules, while taking into account all the particularities of a given case. The
principle of restrictive Interpretation aims at discovering the true Limits of the obligations undertaken by the Parties
to a contract, and at maintaining the integrity of this contract by eliminating obligations which are not necessary to
the common purpose of the contracting Parties. Since it has this function, it is a necessary corrective of the principle
of teleological Interpretation. However, the supreme authority of the text which was the object of the Parties'
agreement must always be upheld. As was stated by the Permanent Court of International Justice in the Wimbledon
Case: 'The Court feels obliged to stop at the point where the so-called restrictive Interpretation would be contrary to
the plain terms of the article and would destroy what has clearly been granted'. (P.C.I..J., Series A, No. 1, p. 241 ).
" The Arbitration Tribunal cannot accept the contention that, for the sole reason that a State is a Party to a contract
with a private Person, the rights of the latter must be interpreted restrictively, In its opinion, the rights of the Parties
must be evaluated and examined in a spirit of complete equality. This is because the rights of one Party are increased
as a result of restrictive Interpretation to the extent that the rights of the other Party are restricted. This result cannot
be founded only upon the quality of the subjects involved in a contractual relationship. It is only when the exact
meaning of such a contract is impossible to determine that the Interpretation most favourable to the freedom of the
State may be adopted. This was held, with respect to inter-State relations; by the Permanent Court of International
Justice (Territorial Jurisdiction of the International Commission of the River Oder: P.C.I.J., Series A., No. 23, p. 261
). Moreover, the judicial solution just quoted could not be applied automatically, even if the State considered that
some interests involving its sovereignty are concerned. The restrictions of its powers, which a State accepts by
contract, are a manifestation of its sovereignty and States are bound to fulfil their obligations to the same extent as
private persons. Restrictive interpretation may only be justified when the sovereign rights invoked by the State

concern interests of a general nature which cannot be defended otherwise than by disregarding the doubtful clauses
of a contract.
" In this connection, a distinction must be drawn between public service concessions and concessions for the
exploitation of raw materials, of which oil and mining concessions are a particular example.
" It is understandable that many writers an administrative law, especially in France, and that judicial practice in
many countries, hold the view that public service concessions must be restrictively interpreted, because they
presuppose the existence of users who are deprived of the benefit of free competition by others. But as concessions
for the development of natural resources, where there are no users, do not constitute an exception to the rule of free
competition, a restrictive interpretation in favour of the State cannot be justified. With regard to oil concessions,
particularly in Saudi Arabia-where the principle of free competition does not have to be upheld in this instancerestrictive Interpretation. has no longer any foundation. The Parties, the State an the one hand and the Company an
the other, have concluded a 'commutative' contract, which involves reciprocal rights and obligations, without any
effect an users who are entirely lacking. When the contract was signed in 1933, there was no ship flying the Saudi
Arabian flag. No general interest of the State was endangered by the grant to Aramco of the exclusive right which
has been analyzed above. The same is true today, for the grant of a priority right to ships flying the national flag
cannot be justified an the grounds of interests of a general nature, pertaining to the sovereignty of the State, but only
by the satisfaction of the particular interests of Mr. Onassis and of his companies. Even if Articles 1 and 22 of the
Concession give rise to doubt, no restrictive interpretation of Aramco's exclusive rights would be warranted.
" The majority of the many judicial precedents which have been quoted by the Government in support of the
opposite view are irrelevant, for they concern the Interpretation of rules of public international law or of inter-State
treaties, and not of a concession between a State and a private corporation. In the Law of Nations, the Problem
assumes a different character, for any limitation of the sovereignty of one State in favour of another entails an
extension of the latter's sovereignty. This cannot follow in the relations between a State and private individuals.
"Among the few examples of the latter Situation, the Parties have emphasized, and invoked in turn, the cases of
Radio Corporation of America v. China1 and of Radio Corporation of America v. Czechoslovakia,2 both of which
were decided by arbitral awards. Both cases gave rise to similar Problems, which bear some analogy with those
which arise in the present case, since both involved also a conceding State which had granted to a second
concessionaire rights held by the first concessionaire to be incompatible with its own rights. The Same triangular
Situation is found there as in Aramco's Case, namely, a Government, a foreign concessionaire and a competitor who
was also a foreign concessionaire.
" In the case Radio Corporation of America v. China, the Chinese Government had granted to the Corporation a
concession for the establishment of a direct radio-telegraphic circuit between China and the United States. Later, it
granted to another Corporation a concession for the establishment of a similar circuit, which the first concessionaire
considered as an infringement of its rights. The Board of Arbitration called upon to examine the dispute decided that
the second concession did not constitute a violation of the first, because that first concession did not expressly confer
any exclusive rights an the concessionaire. The award, rendered on 23 April 1935, is in fact not founded an a
restrictive Interpretation of the concession and of the obligations, undertaken by a State, which affect the public
interest, but an the absence of any exclusive rights in favour of the first concessionaire. The Board of Arbitration
merely raised the question whether, in spite of the absence of any contractual Provision granting exclusive rights,
such rights could nevertheless be implied, and it answered this question in the negative.
" But in the dispute between the same Radio Corporation of America and Czechoslovakia, where the facts were
analogous, another Board of Arbitration held, in the opposite Sense, that Czechoslovakia had not the right to

establish a second direct radio y telegraphic service between that State and the United States by granting a second
concession to a rival Corporation. The differences between the two cases lies in the fast that, in its agreement with
Czechoslovakia, the first American Corporation had taken the precaution of securing an exclusive right to transmit
messages between the two States. Notwithstanding the fact that a State was a Party to it, the contract was not
interpreted restrictively in the State's favour, inasmuch as its text was sufficiently explicit to establish the exclusive
right of the first co-contracting Corporation to transmit messages over a radio-telegraphic circuit.
" The resemblance of this latter case to that of Aramco is obvious. This Company has also been granted expressly by
the text of its concession an exclusive right which the State attempts to interpret restrictively, by alleging that it does
not cover sea transport and that Aramco has so little need of this right that it never exercised it itself but always
through third Parties. But this means of Interpretation does not appear acceptable, especially when one bears in mind
Aramco's vast expenditure for the construction of docks, wharves and all the technical installations needed for the
loading, pumping and export of oil. Such expenditure can only be explained by reference to the exclusive right to
transport, to carry away and to export which is granted to the Company by Articles 1 and 22 of the Concession, with
no other restriction than that relating to transportation by air.
" In the arbitration of Abu Dhabi (a British protectorate),1 which also took place between a Government and a
concessionary oil company, the Arbitrator, Lord Asquith of Bishopstone, did not apply the principle of restrictive
" The Arbitration Tribunal comes therefore to the conclusion that international tribunals, in disputes bearing a fairly
close resemblance to the present one, have not applied the theory that, in case of doubt, a concession should be
interpreted in favour of the State. French and American decisions, which are mainly invoked by the Government,
cannot be considered as having been followed by international tribunals, for various reasons: either because
restrictive interpretation was only admitted in favour of the users of a public service concession, whereas Aramco's
Concession concerns the development of State resources in the absence of any users; or because the Concession
under consideration was directly prejudicial to the public interest, whereas Aramco's operations have greatly
contributed to the economic prosperity of the nation; or because the passages quoted were mere obiter dicta and
were not part of the ratio decidendi. The principle of restrictive interpretation of the contractual obligations of a
Government towards a private individual is not a cardinal rule of legal interpretation. It is only one rule among many
others, which may or may not influence the judge, due consideration being given to the nature of the case and
particularly to the text of the contract. To resort to restrictive Interpretation, it is not enough to contend that the text
of a contract is ambiguous or incomplete. One must first establish the alleged ambiguities or lacunae of the written
text-which is the basis of all the process of interpretation-before one can have recourse to restrictive interpretation.
The Tribunal finds that the Government has failed to prove that the meaning of Articles 1 and 22 of the 1933
Concession is doubtful.
" This opinion of the Arbitration Tribunal is clearly confirmed by the teachings of Moslem law. As has been pointed
out above, this law does not distinguish between treaties, contracts of public or administrative law and contracts
between private persons. Moslem judicial practice has never admitted that a contract concluded by a Government
should be interpreted in its favour. The Hanbali Jurist Ibn Taimiya writes in this connection:
" 'If proper fulfilment of obligations and due respect for covenants are prescribed by the Lawgiver it follows that the
general rule is that contracts and stipulations axe valid. It would have been meaningless to give effect to contracts
and recognize the legality of their objectives unless these contracts were themselves valid. Since the Lawgiver
recognizes the validity of their objective, He hereby indicates that in principle contracts are valid.'

" If any permitted stipulation must be performed, and if there is no difference between the contract concluded by a
sovereign and other contracts, it follows that it is incorrect to Interpret the contract in the State's favour in case of
" It may be added that a restrictive interpretation would not be unfavourable to Aramco. It is indeed undisputed that,
according to Article 1 of the Concession Agreement, the Company's exclusive right to transport covers 'the area
defined below', i.e., in Article 2. This portion of the State domain comprises the territorial waters of Saudi Arabia in
the Persian Gulf. The Government's contention that transport can only mean internal or Inland Transport is thus
without foundation. It follows inevitably that Aramco has the exclusive right to transport its oil an all the maritime
domain in the Persian Gulf over which the Government exercises its sovereignty. This solution is beyond all
question, in view of Article 4 of the Offshore Agreement of 10 October 1948. Consequently, even if its right to
transport were to be restrictively interpreted, the Company would not be bound to tolerate that another
concessionaire be granted a priority right to transport Aramco's oil and derivatives within the territorial waters of the
Eastern coast of Saudi Arabia. This conclusion, incontrovertible in view of the texts, manifestly demonstrates the
error contained in the argument which denies a right of transportation an the high seas to Aramco, since the latter
alone has the right to reach the high seas with its oil across the territorial waters.
" The applicability of the other modes of Interpretation which have been advocated by the Government would
appear to be even more doubtful than that of the preceding ones; they cannot, in the Tribunals opinion, lead to a
result which is either satisfactory from a rational point of view, or useful to the Parties from an economic point of
view. The Government laid much stress to begin which and later on emphasized somewhat less strongly the rule
verba chartarum fortius accipiuntur contra proferentem. It maintained that it was Aramco which had applied for the
Concession and which had prepared its draft. All omissions or ambiguities in the text should therefore be interpreted
against the Company, since it has not been proved that the Government ever intended to surrender its rights to
regulate sea transport. Such a surrender should be clearly expressed, as the exclusive right to transport, it is alleged,
only concerns the exclusive area. The Tribunal feels bound to observe that no proof has been furnished to the effect
that the conclusion of the contract was due to Aramco's initiative. The Company has maintained-and its Statement
has not been questioned-that, after the unsuccessful experience of the gram to the Eastern and General Syndicate, a
British Corporation, the Government sent an authorized agent to the United States to approach an American
company and persuaded Socal to apply for a concession, after other companies had indicated lack of interest. The
rule contra proferentem can have its full effects only in the case of so-called 'adhesion contracts', whose terms are
not discussed between the Parties, or when, in inter-State relations, one Party hands to the other, for signature, a
prepared text which can be modified only in Order better to ensure its application, as was the case with the Treaty of
Versailles. If it appears certain that the first drafts were prepared by the concessionary Company's experts, it must
not be forgotten that the Government was acquainted with the system of oil concessions.
" Protracted discussions over a period of months took place. After the interchange of ideas and the examination of
drafts prepared, sometimes by one, sometimes by the other Party, these discussions led to the 1933 Agreement,
which is the product of Joint effort. The theoretical basis of the rule contra proferentem, it may be noted in passing,
is somewhat doubtful for it starts from the unverified premise that the Party who has not drafted the text of the
contract is less careful and less able than the Party who drafted it. The rule itself, in any event, cannot be applied in
the case of mining or oil concessions, where the elementary duty of the authorities of the State is to scrutinize
thoroughly the texts prepared and where they cannot have given their consent by surprise. It follows that the rule
might well be directed against them and that they might be criticized, if the agreement contains any ambiguity or
lacuna, for not having exercised their functions with the care and the diligence required from agents of the State.
Moreover, as the principle of interpretation contra proferentem is disputed, it is applied only, in international and
national decisions, when all other means of interpretation have proved ineffective. In the Tribunals opinion, such is
not the case here, and the principle of effectiveness, i.e., by the full effect of the essential purpose, confirms the
results of the literal and grammatical interpretation of Articles 1 and 22 of the 1933 Concession Agreement.

" Similar observations can be made about the principle of Interpretation of obligations in favour of the debtor. In the
Government's opinion, this principle has only a corroborating character, although it is a fundamental principle of
Moslem law as regards the Interpretation of contracts. It is based, as in Roman Law and in French law, on the idea
that the obligor must always be presumed to have intended to bind himself as little as possible, or not to bind himself
at all. In dubio mitius. This principle has been strongly criticized and deprecated by modern doctrine. Legal writers
have underlined its weakness in the case of synallagmatic contracts where the Parties are reciprocally creditors and
debtors, obligees and obligors, so that the principle of the favor debitoris would only have effect for that Party who
contests the scope of its obligation and overlooks the advantages derived, or to be derived, by it from the contract. It
would appear just as logical and equitable to hold that the contract should be construed in favour of the creditor ,
who has already fulfilled his obligations or who fulfils them regularly.
" The question could be raised, in the present dispute, whether the Government is in the position of the obligor, since
it has undertaken not to interfere with the exercise by the Company of its exclusive right, or in the Position of a
creditor, who claims against the concessionaire a priority right of sea transport which, in its opinion, is not included
in the Concession. In the latter hypothesis, the Government would not be in a position to claim that the contract
should be construed in its favour; in the former the Tribunal would be bound to take into account the fact that the
Government, ever since the conclusion of the Concession Agreement, has drawn from it important financial benefits
and that the Company, while fulfilling faithfully all its obligations and incurring serious risks, has continued to par
large Sums which were the origin of Saudi Arabia's prosperity. According to the principle of good faith, the
Government should prove that it has undertaken a more restricted (negative) obligation than that alleged by the
Company. This proof has not been furnished and evidence to the contrary may be found in the manner in which the
Concession Agreement has been carried out without any protest or opposition on the part the Government, for more
than seventeen years.

" E. The legal nature of the Onassis Agreement.

" The Arbitration Tribunal is of the opinion that it does not have to prounounce upon the question of the validity of
the Onassis Agreement, since that question has not been submitted to it. It must examine, however, whether this
Agreement is in conflict with the Aramco Concession, i.e., whether the beneficiaries under this Agreement have
rights which are incompatible with those of Aramco.
" The answer to this question logically depends an the validity of the Onassis Agreement. It is beyond doubt that this
Agreement can only violate Aramco's rights under the Aramco Concession Agreement if it is valid under Moslem
law for, if it were invalid, it could have no legal effects, and consequently, no conflict with Aramco's rights could
possibly arise.
" The Arbitration Tribunal does not wish to prejudge the answer to be given to this question. The following
observations will be based on the hypothesis which is the most unfavourable to Aramco, i.e., that of the validity,
until further evidence, of the Onassis Agreement.
"As the Onassis Agreement was ratified by Royal Decree, the Government contends that it has acquired legal force
in Saudi Arabia, and blames the Company for opposing the laws of the State by refusing to implement it.
" The first point to be examined is therefore the legal nature of the Onassis Agreement as compared with the Aramco
Concession Agreement.

"A careful and thorough study of these two legal instruments shows that their nature is similar. Both are based upon
an agreement concluded by the Minister of Finance of Saudi Arabia and later ratified by Royal Decree. This is the
manner in which concessions are granted under Saudi Arabian law. The Tribunal is thus confronted with two
Concessions. One was granted to Aramco by the Agreement Of 29 May 1933, corresponding to 4 Safar 1352, and
ratified by Royal Decree No. 1135 Of 7 July 1933, corresponding to 14 Rabie al Awal 1353. The other was granted
to Mr. A. S. Onassis, on his own behalf and on behalf of the companies he represents, by an instrument, also called
'Agreement ', of 2o January 1954, corresponding to 15 Jamad al Awal 1373, ratified by Royal Decree No- 5737, of 9
April 1954, corresponding to 6 Shaaban 1373.
" Both texts are thus agreements which were similarly ratified, and which have the character of ordinary and regular
concessions under Saudi Arabian law, in which concessions, unknown to religious law, must always be approved by
a Royal Decree.
" It is difficult to admit that these Agreements should be characterized as laws under the legal system of Saudi
Arabia. Reference may be made here to the Fundamental Instructions of the Kingdom of the Hijaz Of 31 August
1926, corresponding to 21 Safar 1345 where it is provided in Article 5 that: 'All the Administration of the Kingdom
of the Hijaz belongs to H.M. the King who is bound (muqayad) by the norms of the noble Shari'ah' ; likewise, the
Order concerning the Council of Ministers contains an Article 1 which provides: 'The Council of agents, "wukala",
is composed of the Minister of Foreign Affairs, the Minister of Finance and the Minister of the Consultative
Council". It follows from these texts that Ministers do not have in Saudi Arabia a position analogous to that which is
recognized to them in most Western legal systems. They are representatives, agents of the King. This is a
consequence of the form of the State, which is a theocratic monarchy. The Ministers' administrative acts must be
ratified by the King, who concentrates in his person all powers of administration. This juridical position explains
why concessions such as the Aramco Concession of 29 May 1933 and the Onassis Concession Of 20 January 1954
as amended by the two letters Of 7 April 1954, had to be ratified by Royal Decrees. These Decrees, as is shown by
their wording, are but ratification or approbation decrees, each of which relates only to one specific Agreement.
They do not possess the character of a general Regulation as, for instance the 'Regulation an Saudi Arabian
Nationality' issued in 'Umm Al Qura' of 16 December 1948, which is an example of a true regulation of a general
scope (Nallino, op cit., pp. 233-237 and 244; the texts quoted above are translated from his book; cf. also Laoust,
Essai sur les doctrines sociales et politiques de Taki-D-Dia2 Ahmad B. Taimiya, Annexes, p. 625).
" If an attempt were made to consider those Concessions as laws, the Aramco Concession Agreement could only be
characterized as a special Law relating to the position of a particular company. However, the Government claims
that Royal Decree No. 5737, ratifying the Onassis Agreement, has the nature of a general law regulating the
maritime transport of oil and its derivatives (Verbatim Transcript, 36th day, French text, p. 201 ; official translation
p. 201 ; cf. also Verbatim Transcript, 21st day, p. 682). Such Law could not derogate from the previous Royal
Decree No. 1135, by virtue of the principle generalia specialibus non derogant, which is followed in international
judicial decisions (cf. Annual Digest and Reports of Public International Law Cases, 1929-1930, pp. 400-401 and
440) The application of this general rule of law cannot be contested as regards laws which are addressed to different
categories of persons. It may be added that this was recognized by the Government itself in the Agreement of m July
1947 relating to the Trans Arabian Pipeline, where Article XXIV stipulates that the Agreement 'shall not prejudice or
derogate from any right or privileges created by any existing convention or agreement by which Government is
" Nevertheless, the Arbitration Tribunal finds that the Agreements concluded by the Government with Aramco an the
one hand, and which Mr. Onassis an the other, have a purely contractual nature, since this is in accordance with the
legal nature of concessions in Saudi Arabian law where the King's intervention is needed merely to make the
contract perfect. Furthermore, the Onassis Agreement does not lay down norms of a general and impersonal

application, but it establishes an individual situation to the advantage of Mr. Onassis and the companies he
" This purely contractual character of the Onassis Agreement, it should be noted, has been affirmed by the
Government itself which, in a Letter of 25 January 1954 to the Chairman of Aramco's Board of Directors, informed
him textually that 'His Majesty's Government has concluded an agreement with Mr. Onassis and Company'. This
Letter had been sent to Aramco before the Onassis Agreement was amended by Mr. Onassis' Letter Of 7 April 1954,
and more than two months before the ratification, by Royal Decree, of 9 April 1954, that is, at a time when this
Agreement could not possibly have the character of a Law-as the Government claimed at a later date. In order to
invoke this Agreement against Aramco, the Minister of Finance and National Economy of the State was thus bound
to rely an its purely contractual nature. It is also worth noting that the Letter of 5 June 1955, corresponding to 14
Shawal 2374, from the Minister of Finance to Aramco containing an authentic interpretation, called 'clarification', of
the Onassis Agreement, was never ratified by Royal Decree. This fact merely confirms the contractual nature of an
Instrument which may be modified or supplemented by mutual agreement of the contracting Parties.
" As regards Aramco, the Onassis Agreement is a res inter alios acta which can neither diminish nor increase its
" In its capacity as first concessionaire, Aramco enjoys indeed exclusive rights which have the character of acquired
or ' vested ' rights and which cannot be taken away from it by the Government by means of a contract concluded
with a second concessionaire, even if that contract were equal to its own contract from a legal point of view. The
principle of respect for acquired rights is one of the fundamental principles both of public international law and of
the municipal law of most civilized States. It has been affirmed by a wealth of judicial decisions: Permanent Court
of International Justice, judgment of May 25th, 1926, in the case of German Interests in Polish Upper Silesia
(Merits) (P.C.I.J., Series A, No- 7, pp. 22 and 441 ) ; Advisory Opinion of September 10th, 1923,
concerning German Settlers in Poland (P.C.L, j., Series B, No. 6, p. 362 ). It was also proclaimed in the following
precedents, which are very characteristic and which relate to disputes between a State and private individuals:
Arbitration Tribunal of Upper Silesia, award of 6 June 1931, in the case Niederstrasser v. Poland (Schiedsgericht fr
Oberschlesien, vol. II, Nos. 3-4, p. 1563 )' Special Arbitration Tribunal between Germany and Rumania, award Of
27 September 1938, in the case Goldenberg and Sons v. Germany (U.N.R.L.A.A., vol. II, p. 9094 ) ; Arbitration
Tribunal established by the Council of the League of Nations and presided over by Mr. Guerrero, award of .18 June
1929 in the case of the concession of the Sopron-Kszeg-Local Railway Company, which was once a subject of the
late Austro-Hungarian Monarchy (Annual Digest and Reports of Public International Law Cases, 1929-1930, Case
No. 34).
" In the Hanbali school of Islamic law, respect for previously acquired private rights, and especially for contractual
rights, is a principle just as fundamental as it is in the other legal Systems of civilized States.
" This follows from the fact that valid contracts bind both Parties and must be performed, for rights resulting from
agreements concluded for due consideration are absolutely secure; when one party has granted certain rights to the
other contracting party, it can no longer dispose of the same rights, totally or partially, in favour of another party.
" Having considered that Aramco's exclusive right to transport by sea was proved beyond all question, the
Arbitration Tribunal has no hesitancy in finding that the company is legally protected by this principle of acquired
rights. It holds that Aramco is justified in resisting any infringement of the rights granted to it.
" The Government maintains, however, that the Onassis Agreement is nothing but a manifestation of the powers
belonging to it to ensure preferential treatment to vessels flying its national flag and to regulate accordingly the

performance of the rights and obligations of any concessionaire in Saudi Arabia. The Tribunal must now determine
whether this claim is justified or not.


Name of the Case: The Lotus Case (France vs Turkey); Year of the decision: 1927; and Court: PCIJ.
Overview: A collision occurred on the high seas between a French vessel and a Turkish vessel. Victims were Turkish
nationals and the alleged offender was French. Could Turkey exercise its jurisdiction over the French national
under international law?
Facts of the Case:
A collision occurred on the high seas between a French vessel Lotus and a Turkish vessel Boz-Kourt. The BozKourt sank and killed eight Turkish nationals on board the Turkish vessel. The 10 survivors of the BozKourt (including its captain) were taken to Turkey on board the Lotus. In Turkey, the officer on watch of the Lotus
(Demons), and the captain of the Turkish ship were charged with manslaughter. Demons, a French national, was
sentenced to 80 days of imprisonment and a fine. The French government protested, demanding the release of
Demons or the transfer of his case to the French Courts. Turkey and France agreed to refer this dispute on the
jurisdiction to the Permanent Court of International Justice (PCIJ).
Questions before the Court:
Did Turkey violate international law when Turkish courts exercised jurisdiction over a crime committed by a French
national, outside Turkey? If yes, should Turkey pay compensation to France?
The Courts Decision:
Turkey, by instituting criminal proceedings against Demons, did not violate international law.
Relevant Findings of the Court:
Establishing Jurisdiction: Does Turkey need to support its assertion of jurisdiction using an existing rule of
international law or is the mere absence of a prohibition preventing the exercise of jurisdiction enough?
The first principle of the Lotus case said that jurisdiction is territorial: A State cannot exercise its jurisdiction outside
its territory unless an international treaty or customary law permits it to do so. This is what we called the first Lotus

Now the first and foremost restriction imposed by international law upon a State is that failing the existence of a
permissive rule to the contrary it may not exercise its power in any form in the territory of another State. In this
sense jurisdiction is certainly territorial; it cannot be exercised by a State outside its territory except by virtue of a
permissive rule derived from international custom or from a convention. (para 45)
The second principle of the Lotus case: Within its territory, a State may exercise its jurisdiction, on any matter,
even if there is no specific rule of international law permitting it to do so. In these instances, States have a wide
measure of discretion, which is only limited by the prohibitive rules of international law.
It does not, however, follow that international law prohibits a State from exercising jurisdiction in its own territory,
in respect of any case which relates to acts which have taken place abroad, and in which it cannot rely on some
permissive rule of international law. Such a view would only be tenable if international law contained a general
prohibition to States to extend the application of their laws and the jurisdiction of their courts to persons, property
and acts outside their territory, and if, as an exception to this general prohibition, it allowed States to do so in certain
specific cases. But this is certainly not the case under international law as it stands at present. Far from laying down
a general prohibition to the effect that States may not extend the application of their laws and the jurisdiction of their
courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion,
which is only limited in certain cases by prohibitive rules; as regards other cases, every State remains free to adopt
the principles which it regards as best and most suitable. This discretion left to States by international law explains
the great variety of rules which they have been able to adopt without objections or complaints on the part of other
States In these circumstances all that can be required of a State is that it should not overstep the limits which
international law places upon its jurisdiction; within these limits, its title to exercise jurisdiction rests in its
sovereignty. (paras 46 and 47)
This applied to civil and criminal cases. If the existence of a specific rule was a pre-requisite to exercise jurisdiction,
PCIJ argued, then it wouldin many cases result in paralysing the action of the courts, owing to the impossibility
of citing a universally accepted rule on which to support the exercise of their [States] jurisdiction (para 48).
The PCIJ based this finding on the sovereign will of States.
International law governs relations between independent States. The rules of law binding upon States
therefor emanate from their own free will as expressed in conventions or by usages generally accepted as expressing
principles of law and established in order to regulate the relations between these co-existing independent
communities or with a view to the achievement of common aims. Restrictions upon the independence of States
cannot therefore be presumed
[NB: This was one of the more debated aspects of the judgement. Some argued that the Court placed too much
emphasis on sovereignty and consent of States (i.e. took a strong positivist view)].

Criminal Jurisdiction: Territorial Jurisdiction

France alleged that the flag State of a vessel would have exclusive jurisdiction over offences committed on board the
ship in high seas. The PCIJ disagreed. It held that France, as the flag State, did not enjoy exclusive territorial
jurisdiction in the high seas in respect of a collision with a vessel carrying the flag of another State (paras 71 84).
The Court held that Turkey and France both have jurisdiction in respect of the whole incident: i.e. there is concurrent
The PCIJ held that a ship in the high seas is assimilated to the territory of the flag State. This State may exercise its
jurisdiction over the ship, in the same way as it exercises its jurisdiction over its land, to the exclusion of all other
States. In this case, the Court equated the Turkish vessel to Turkish territory. In this case, the PCIJ held that the
offence produced its effects on the Turkish vessel and consequently in a place assimilated to Turkish territory in
which the application of Turkish criminal law cannot be challenged, even in regard to offences committed there by
foreigners. Turkey had jurisdiction over this case.
If, therefore, a guilty act committed on the high seas produces its effects on a vessel flying another flag or in
foreign territory, the same principles must be applied as if the territories of two different States were concerned, and
the conclusion must therefore be drawn that there is no rule of international law prohibiting the State to which the
ship on which the effects of the offence have taken place belongs, from regarding the offence as having been
committed in its territory and prosecuting, accordingly, the delinquent.
The Lotus Case was also significant in that the PCIJ said that a State would have territorial jurisdiction, even if the
crime was committed outside its territory, so long as a constitutive element of the crime was committed in that State.
Today, we call this subjective territorial jurisdiction. In order for subjective territorial jurisdiction to be established,
one must prove that the element of the crime and the actual crime are entirely inseparable; i.e., if the constituent
element was absent the crime would not have happened.
The offence for which Lieutenant Demons appears to have been prosecuted was an act of negligence or
imprudence having its origin on board the Lotus, whilst its effects made themselves felt on board the Boz-Kourt.
These two elements are, legally, entirely inseparable, so much so that their separation renders the offence nonexistent It is only natural that each should be able to exercise jurisdiction and to do so in respect of the incident as
a whole. It is therefore a case of concurrent jurisdiction.
Customary International Law
The Lotus case gives an important dictum on creating customary international law. France alleged that jurisdictional
questions on collision cases are rarely heard in criminal cases because States tend to prosecute only before the flag
State. France argued that this absence of prosecutions points to a positive rule in customary law on collisions.The

Court held that this would merely show that States had often, in practice, abstained from instituting criminal
proceedings, and not that they recognized themselves as being obliged to do so; for only if such abstention were
based on their being conscious of having a duty to abstain would it be possible to speak of an international custom.
The alleged fact does not allow one to infer that States have been conscious of having such a duty; on the other
hand, as will presently be seen, there are other circumstances calculated to show that the contrary is true. In other
words, opinio juris is reflected in acts of States (Nicaragua Case) or in omissions (Lotus case) in so far as those acts
or omissions are done following a belief that the said State is obligated by law to act or refrain from acting in a
particular way. (For more on opinio juris click here)
Subsequent ICJ Decisions and Separate Opinions That Referred to Principles of the Lotus Case
1. Advisory Opinion on the Unilateral Declaration of Kosovo (2010)
In the Kosovo Advisory Opinion the Court had to decide if the unilateral declaration of Kosovo of February 2008
was in accordance with international law. The Court inquired and concluded that the applicable international law
did not prohibit an unilateral declaration of independence. Based on this finding, the Court decided that the
adoption of the declaration of independence did not violate any applicable rule of international law.
Judge Simma disagrees, inter alia, with Courts methodology in arriving at this conclusion. He imputes the method
to the principle established in the Lotus case: that which is not prohibited is permitted under international law.
He criticises the Lotus dictum as an out dated, 19th century positivist approach that is excessively differential
towards State consent. He says that the Court should have considered the possibility that international law can be
deliberately neutral or silent on the international lawfulness of certain acts. Instead of concluding that an the absence
of prohibition ipso facto meant that a unilateral declaration of independence is permitted under international law, the
court should have inquired whether under certain conditions international law permits or tolerates unilateral
declarations of independence.

Trail Smelter Case/1937


Trail Smelter Case/1937

The Issue
The Consolidated Mining and Smelting Company Limited of
Canada operated a zinc and lead smelter along the Columbia river at
Trail, British Columbia about 10 miles north of the international
boundary with the State of Washington. In the period between 1925 and
1935, the U.S. Government objected to the Canadian Government that
sulfur dioxide emissions from the operation were causing damage to the

Columbia River valley in an 30 mile stretch from the international

boundary to Kettle Falls, Washington. The two governments
resorted twice to legal arbitration, once from 1928 to 1931 and again from
1935 to 1941, in an attempt to resolve the dispute. The outcome
of each decision involved some payment by the Canadian Government
for damages caused to the State of Washington. The latter decision
also prescribed a set of operational guidelines under which the
smelter at Trail should conclude its operations for at least a
year-and-a-half. The main concern of the United States was that
the smelter's sulfur dioxide emissions were harming the land and
the trees of the Columbia River Valley which were used for
logging, farming, and cattle grazing; the three industries crucial to the
area. The main species affected were yellow pines, Douglas firs,
larch, and cedar. Affected harvests included alfalfa, wheat, and

In 1896, a smelter located in Trail, British Columbia, began
operating under American ownership. However, in 1906, the
Consolidated Mining and Smelting Company of Canada, Ltd. bought
the smelter plant in Trail. This company expanded the plant in size
and in turn in its capacity to smelt zinc and lead ores. However,
in 1925 and in 1927, two large, 400-foot smoke stacks were built.
There was a resulting increase in the amount of sulfur emitted
into the air. Within that same time period the amount of sulfur
released from the plant on a monthly basis almost doubled from
what it had been in 1924. The amount of sulfur released in 1924 was
about 4,700 tons per month. But in 1927, the amount had risen to
9,000 tons per month. These increases continued because this
smelting operation of zinc and lead had become one of the largest
in North America. Finally, the effect of these harmful amounts
of sulfur being released were noticed in the State of Washington.
The effects were noticeable because for every ton of sulfur released
into the air there are two tons of sulfur dioxide created. It
was this increase in sulfur dioxide that was detected through the
In the period between 1928 and 1935, the Government of the
United States filed complaints with the Government of Canada that
sulfur dioxide emissions from the Trail smelter had damaged the
Columbia River Valley. On August 7, 1928, the issue was referred
to the International Joint Commission by the United States and
Canada (IJC-UC) for settlement. The IJC-UC decided on February 28, 1931
that the Trail smelter should limit its sulfur dioxide emissions
and that Canada should pay the United States US$350,000 as
compensation for damages.
Despite the IJC-UC decision, the conditions at the Trail
smelter did not improve. Consequently, by February 1933 the U.S.
Government was refiled complaints to the Canadian Government
about the situation at the smelter. These set of complaints led to an
emissions convention which was signed by the two parties on April
15, 1935. The Convention called for the creation of a Tribunal
to determine the answers to four questions:
1. Had damage been done to Washington State by the smelter
since January 1, 1932?
2. If the smelter was found to have done damage, should it
be made to refrain from doing so in the future?

3. Should the smelter operate under any restrictions?

4. Should any compensation be paid in light of the answers
to questions 2 and 3?{2}
After both the Canadian and U.S. Governments presented their
evidence to the Tribunal in January of 1938, the Tribunal informed
the governments on April 16, 1938 that it had a final decision on
Question 1, but required more time to answer the other 3
questions. It also asked that the smelting operation at Trail have
restrictions placed on it to study the effects of its sulfur
dioxide emissions. The two governments agreed to the trial
restrictions (1938-1940). As for the Tribunal's decision on
question 1, it was determined that the Government of Canada should
pay the United States US$78,000 for damage that the Trail Smelter
had done to the State of Washington from 1932 to October 1, 1937.
This compensation was primarily for damage done to land along the
Columbia River valley in the United States. The Tribunal decided
that the United States had not displayed enough evidence for damage
to livestock or businesses in Washington State from the operation
of the Trail smelter.
Following the trial restrictions, the Tribunal gave its answer
to the final 3 questions on March 11, 1941. It had decided that
the Trail Smelter should refrain from causing any future damage
to the State of Washington from its sulfur dioxide emissions. To
ensure this, it mandated that the smelter maintain equipment to
measure the wind velocity and direction, turbulence, atmospheric
pressure, barometric pressure, and sulfur dioxide concentrations
at Trail. Readings from these instruments were to be used by the
smelter to keep its sulfur dioxide emissions at or below levels
determined by the Tribunal. Moreover, copies of the readings were
to be supplied to both governments monthly so that they could see
the smelter's compliance. If the smelter could not keep to the
prescribed sulfur dioxide levels, then compensation could be
awarded to the United States as determined by the Tribunal and
the Canadian Government.
Despite the U.S. Government's contention that the emissions
from Trail damaged the land, livestock, and businesses in almost
140,000 acres along the Columbia River valley in northern
Washington State, the Tribunal only found that real damage had
been done to the uncleared forest land and cleared farm land along the
Columbia River. In November of 1949, the U.S. Secretary of State
wrote a note to the Canadian Ambassador to the United States to
offer to refund to the Canadian Government US$8,828.19 of the money
that the Canadian Government had paid to the United States as
compensation for damages caused by operation of the Trail
smelter. This money was what was left over from the US$428,179.51 that the
Canadian Government had paid as damages after the U.S. Government
had paid off all of the claims of individual property owners in
Washington State against the Trail smelter. The Canadian
Government accepted this refund in January of 1950.
The Trail smelter is still in operation today. It is owned by
Cominco Limited of Vancouver, who uses the smelter to refine lead,
zinc, silver, gold, bismuth, cadmium, and indium. Cominco employs
125 individuals at the site (see GEDDES case).

Nottebohm Case (Liechtenstein v. Guatemala)

International Court of Justice1955 I.C.J. 4

Nottebohm was born a German national in 1881. He received citizenship through
naturalization from Liechtenstein (plaintiff) in 1939. Prior to this date, in 1905,
Nottebohm lived and performed substantial business dealings in Guatemala
(defendant), and returned frequently to Germany to visit family. Once Nottebohm
received his citizenship from Liechtenstein, he returned to Guatemala and
Guatemalan authorities updated his nationality in the Register of Aliens. On July 17,
1941, the United States blacklisted Nottebohm and froze all his assets which were
located in the United States. War broke out between the United States and
Germany, and between Guatemala and Germany, on December 11, 1941.
Nottebohm was arrested in Guatemala in 1943 and deported to the United States,
where he was held until 1946 as an enemy alien. Once released, Nottebohm applied
for readmission to Guatemala, but his application was refused. Nottebohm moved
his residence to Liechtenstein (where he was a citizen), but Guatemala had already
taken steps to confiscate Nottebohms property in Liechtenstein. Guatemala
succeeded in 1949. Liechtenstein instituted legal proceedings against Guatemala in
the International Court of Justice (ICJ), requesting the court declare Guatemala had
violated international law in arresting, detaining, expelling and refusing to readmit
Mr. Nottebohm and in seizing and retaining his property. Additionally, Liechtenstein
requested the ICJ to order Guatemala to pay compensation as reparation.
Guatemala defended by contesting Nottebohms Liechtenstein nationality.
SECRETARY OF JUSTICE, petitioner, vs. HON. RALPH C. LANTION, Presiding Judge, Regional Trial
Court of Manila, Branch 25, and MARK B. JIMENEZ, respondents.
On January 18, 2000, by a vote of 9-6, we dismissed the petition at bar and ordered the petitioner to furnish
private respondent copies of the extradition request and its supporting papers and to grant him a reasonable period
within which to file his comment with supporting evidence.i[1]
On February 3, 2000, the petitioner timely filed an Urgent Motion for Reconsideration. He assails the decision
on the following grounds:
"The majority decision failed to appreciate the following facts and points of substance and of value which, if
considered, would alter the result of the case, thus:
I.There is a substantial difference between an evaluation process antecedent to the filing of an extradition
petition in court and a preliminary investigation.
II. Absence of notice and hearing during the evaluation process will not result in a denial of fundamental
III. In the evaluation process, instituting a notice and hearing requirement satisfies no higher objective.
IV. The deliberate omission of the notice and hearing requirement in the Philippine Extradition Law is intended

to prevent flight.
V. There is a need to balance the interest between the discretionary powers of government and the rights of an
VI. The instances cited in the assailed majority decision when the twin rights of notice and hearing may be
dispensed with in this case results in a non sequitur conclusion.
and hearing.

Jimenez is not placed in imminent danger of arrest by the Executive Branch necessitating notice

By instituting a 'proceeding' not contemplated by PD No. 1069, the Supreme Court has encroached
upon the constitutional boundaries separating it from the other two co-equal branches of government.
IX. Bail is not a matter of right in proceedings leading to extradition or in extradition proceedings." ii[2]
On March 28, 2000, a 58-page Comment was filed by the private respondent Mark B. Jimenez, opposing
petitioners Urgent Motion for Reconsideration.
On April 5, 2000, petitioner filed an Urgent Motion to Allow Continuation and Maintenance of Action and
Filing of Reply. Thereafter, petitioner filed on June 7, 2000 a Manifestation with the attached Note 327/00 from the
Embassy of Canada and Note No. 34 from the Security Bureau of the Hongkong SAR Government Secretariat. On
August 15, 2000, private respondent filed a Manifestation and Motion for Leave to File Rejoinder in the event that
petitioner's April 5, 2000 Motion would be granted. Private respondent also filed on August 18, 2000, a Motion to
Expunge from the records petitioner's June 7, 2000 Manifestation with its attached note verbales. Except for the
Motion to Allow Continuation and Maintenance of Action, the Court denies these pending motions and hereby
resolves petitioner's Urgent Motion for Reconsideration.
The jugular issue is whether or not the private respondent is entitled to the due process right to notice and
hearing during the evaluation stage of the extradition process.
We now hold that private respondent is bereft of the right to notice and hearing during the evaluation stage of
the extradition process.
First. P.D. No. 1069iii[3] which implements the RP-US Extradition Treaty provides the time when an extraditee
shall be furnished a copy of the petition for extradition as well as its supporting papers, i.e., after the filing of the
petition for extradition in the extradition court, viz:
"Sec. 6. Issuance of Summons; Temporary Arrest; Hearing; Service of Notices. - (1) Immediately upon receipt
of the petition, the presiding judge of the court shall, as soon as practicable, summon the accused to appear and to
answer the petition on the day and hour fixed in the order . . . Upon receipt of the answer, or should the accused after
having received the summons fail to answer within the time fixed, the presiding judge shall hear the case or set
another date for the hearing thereof.
(2)The order and notice as well as a copy of the warrant of arrest, if issued, shall be promptly served each upon
the accused and the attorney having charge of the case."
It is of judicial notice that the summons includes the petition for extradition which will be answered by the
There is no provision in the RP-US Extradition Treaty and in P.D. No. 1069 which gives an extraditee the right
to demand from the petitioner Secretary of Justice copies of the extradition request from the US government and its
supporting documents and to comment thereon while the request is still undergoing evaluation. We cannot write a
provision in the treaty giving private respondent that right where there is none. It is well-settled that a "court cannot
alter, amend, or add to a treaty by the insertion of any clause, small or great, or dispense with any of its conditions
and requirements or take away any qualification, or integral part of any stipulation, upon any motion of equity, or
general convenience, or substantial justice."iv[4]
Second. All treaties, including the RP-US Extradition Treaty, should be interpreted in light of their intent.
Nothing less than the Vienna Convention on the Law of Treaties to which the Philippines is a signatory provides that
"a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the

treaty in their context and in light of its object and purpose."v[5] (emphasis supplied) The preambular paragraphs of
P.D. No. 1069 define its intent, viz:
"WHEREAS, under the Constitution[,] the Philippines adopts the generally accepted principles of international
law as part of the law of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and
amity with all nations;
WHEREAS, the suppression of crime is the concern not only of the state where it is committed but also of
any other state to which the criminal may have escaped, because it saps the foundation of social life and is an
outrage upon humanity at large, and it is in the interest of civilized communities that crimes should not go
WHEREAS, in recognition of this principle the Philippines recently concluded an extradition treaty with the
Republic of Indonesia, and intends to conclude similar treaties with other interested countries;
x x x." (emphasis supplied)
It cannot be gainsaid that today, countries like the Philippines forge extradition treaties to arrest the dramatic rise of
international and transnational crimes like terrorism and drug trafficking. Extradition treaties provide the assurance
that the punishment of these crimes will not be frustrated by the frontiers of territorial sovereignty. Implicit in the
treaties should be the unbending commitment that the perpetrators of these crimes will not be coddled by any
signatory state.
It ought to follow that the RP-US Extradition Treaty calls for an interpretation that will minimize if not prevent
the escape of extraditees from the long arm of the law and expedite their trial. The submission of the private
respondent, that as a probable extraditee under the RP-US Extradition Treaty he should be furnished a copy of the
US government request for his extradition and its supporting documents even while they are still under evaluation
by petitioner Secretary of Justice, does not meet this desideratum. The fear of the petitioner Secretary of Justice that
the demanded notice is equivalent to a notice to flee must be deeply rooted on the experience of the executive
branch of our government. As it comes from the branch of our government in charge of the faithful execution of our
laws, it deserves the careful consideration of this Court. In addition, it cannot be gainsaid that private respondents
demand for advance notice can delay the summary process of executive evaluation of the extradition request and its
accompanying papers. The foresight of Justice Oliver Wendell Holmes did not miss this danger. In 1911, he held:
"It is common in extradition cases to attempt to bring to bear all the factitious niceties of a criminal trial at
common law. But it is a waste of time . . . if there is presented, even in somewhat untechnical form according to our
ideas, such reasonable ground to suppose him guilty as to make it proper that he should be tried, good faith to the
demanding government requires his surrender."vi[6] (emphasis supplied)
We erode no right of an extraditee when we do not allow time to stand still on his prosecution. Justice is best served
when done without delay.
Third. An equally compelling factor to consider is the understanding of the parties themselves to the RP-US
Extradition Treaty as well as the general interpretation of the issue in question by other countries with similar
treaties with the Philippines. The rule is recognized that while courts have the power to interpret treaties, the
meaning given them by the departments of government particularly charged with their negotiation and enforcement
is accorded great weight.vii[7] The reason for the rule is laid down in Santos III v. Northwest Orient Airlines, et al.,viii
where we stressed that a treaty is a joint executive-legislative act which enjoys the presumption that "it was first
carefully studied and determined to be constitutional before it was adopted and given the force of law in the
Our executive department of government, thru the Department of Foreign Affairs (DFA) and the Department of
Justice (DOJ), has steadfastly maintained that the RP-US Extradition Treaty and P.D. No. 1069 do not grant the
private respondent a right to notice and hearing during the evaluation stage of an extradition process. ix[9] This
understanding of the treaty is shared by the US government, the other party to the treaty. x[10] This
interpretation by the two governments cannot be given scant significance. It will be presumptuous for the Court to
assume that both governments did not understand the terms of the treaty they concluded.
Yet, this is not all. Other countries with similar extradition treaties with the Philippines have expressed
the same interpretation adopted by the Philippine and US governments. Canadianxi[11] and Hongkongxii[12]

authorities, thru appropriate note verbales communicated to our Department of Foreign Affairs, stated in
unequivocal language that it is not an international practice to afford a potential extraditee with a copy of the
extradition papers during the evaluation stage of the extradition process. We cannot disregard such a convergence of
views unless it is manifestly erroneous.
Fourth. Private respondent, however, peddles the postulate that he must be afforded the right to notice and
hearing as required by our Constitution. He buttresses his position by likening an extradition proceeding to a
criminal proceeding and the evaluation stage to a preliminary investigation.
We are not persuaded. An extradition proceeding is sui generis. It is not a criminal proceeding which will call
into operation all the rights of an accused as guaranteed by the Bill of Rights. To begin with, the process of
extradition does not involve the determination of the guilt or innocence of an accused. xiii[13] His guilt or
innocence will be adjudged in the court of the state where he will be extradited. Hence, as a rule, constitutional
rights that are only relevant to determine the guilt or innocence of an accused cannot be invoked by an extraditee
especially by one whose extradition papers are still undergoing evaluation. xiv[14] As held by the US Supreme Court in
United States v. Galanis:
"An extradition proceeding is not a criminal prosecution, and the constitutional safeguards that accompany a
criminal trial in this country do not shield an accused from extradition pursuant to a valid treaty." xv[15]
There are other differences between an extradition proceeding and a criminal proceeding. An extradition
proceeding is summary in nature while criminal proceedings involve a full-blown trial. xvi[16] In contradistinction to a
criminal proceeding, the rules of evidence in an extradition proceeding allow admission of evidence under less
stringent standards.xvii[17] In terms of the quantum of evidence to be satisfied, a criminal case requires proof beyond
reasonable doubt for convictionxviii[18] while a fugitive may be ordered extradited "upon showing of the existence of a
prima facie case."xix[19] Finally, unlike in a criminal case where judgment becomes executory upon being rendered
final, in an extradition proceeding, our courts may adjudge an individual extraditable but the President has the final
discretion to extradite him.xx[20] The United States adheres to a similar practice whereby the Secretary of State
exercises wide discretion in balancing the equities of the case and the demands of the nation's foreign relations
before making the ultimate decision to extradite.xxi[21]
As an extradition proceeding is not criminal in character and the evaluation stage in an extradition
proceeding is not akin to a preliminary investigation, the due process safeguards in the latter do not
necessarily apply to the former. This we hold for the procedural due process required by a given set of
circumstances "must begin with a determination of the precise nature of the government function involved as
well as the private interest that has been affected by governmental action."xxii[22] The concept of due process is
flexible for "not all situations calling for procedural safeguards call for the same kind of procedure." xxiii[23]
Fifth. Private respondent would also impress upon the Court the urgency of his right to notice and hearing
considering the alleged threat to his liberty "which may be more priceless than life." xxiv[24] The supposed threat to
private respondents liberty is perceived to come from several provisions of the RP-US Extradition Treaty and P.D.
No. 1069 which allow provisional arrest and temporary detention.
We first deal with provisional arrest. The RP-US Extradition Treaty provides as follows:
1.In case of urgency, a Contracting Party may request the provisional arrest of the person sought pending
presentation of the request for extradition. A request for provisional arrest may be transmitted through the
diplomatic channel or directly between the Philippine Department of Justice and the United States Department of
2. The application for provisional arrest shall contain:
a) a description of the person sought;
b) the location of the person sought, if known;
c) a brief statement of the facts of the case, including, if possible, the time and location of the offense;
d) a description of the laws violated;

e) a statement of the existence of a warrant of arrest or finding of guilt or judgment of conviction against
the person sought; and
f) a statement that a request for extradition for the person sought will follow.
3. The Requesting State shall be notified without delay of the disposition of its application and the reasons for
any denial.
4. A person who is provisionally arrested may be discharged from custody upon the expiration of sixty (60)
days from the date of arrest pursuant to this Treaty if the executive authority of the Requested State has not received
the formal request for extradition and the supporting documents required in Article 7." (emphasis supplied)
In relation to the above, Section 20 of P.D. No. 1069 provides:
"Sec. 20. Provisional Arrest.- (a) In case of urgency, the requesting state may, pursuant to the relevant treaty or
convention and while the same remains in force, request for the provisional arrest of the accused, pending receipt
of the request for extradition made in accordance with Section 4 of this Decree.
(b) A request for provisional arrest shall be sent to the Director of the National Bureau of Investigation,
Manila, either through the diplomatic channels or direct by post or telegraph.
(c) The Director of the National Bureau of Investigation or any official acting on his behalf shall upon receipt
of the request immediately secure a warrant for the provisional arrest of the accused from the presiding judge of the
Court of First Instance of the province or city having jurisdiction of the place, who shall issue the warrant for the
provisional arrest of the accused. The Director of the National Bureau of Investigation through the Secretary of
Foreign Affairs shall inform the requesting state of the result of its request.
(d) If within a period of 20 days after the provisional arrest the Secretary of Foreign Affairs has not received
the request for extradition and the documents mentioned in Section 4 of this Decree, the accused shall be released
from custody." (emphasis supplied)
Both the RP-US Extradition Treaty and P.D. No. 1069 clearly provide that private respondent may be
provisionally arrested only pending receipt of the request for extradition. Our DFA has long received the
extradition request from the United States and has turned it over to the DOJ. It is undisputed that until today, the
United States has not requested for private respondents provisional arrest. Therefore, the threat to private
respondents liberty has passed. It is more imagined than real.
Nor can the threat to private respondents liberty come from Section 6 of P.D. No. 1069, which provides:
"Sec. 6. Issuance of Summons; Temporary Arrest; Hearing, Service of Notices.- (1) Immediately upon receipt
of the petition, the presiding judge of the court shall, as soon as practicable, summon the accused to appear and to
answer the petition on the day and hour fixed in the order. [H]e may issue a warrant for the immediate arrest of
the accused which may be served anywhere within the Philippines if it appears to the presiding judge that the
immediate arrest and temporary detention of the accused will best serve the ends of justice. . .
(2) The order and notice as well as a copy of the warrant of arrest, if issued, shall be promptly served each
upon the accused and the attorney having charge of the case." (emphasis supplied)
It is evident from the above provision that a warrant of arrest for the temporary detention of the accused
pending the extradition hearing may only be issued by the presiding judge of the extradition court upon filing of the
petition for extradition. As the extradition process is still in the evaluation stage of pertinent documents and there
is no certainty that a petition for extradition will be filed in the appropriate extradition court, the threat to private
respondents liberty is merely hypothetical.
Sixth. To be sure, private respondents plea for due process deserves serious consideration involving as it does
his primordial right to liberty. His plea to due process, however, collides with important state interests which
cannot also be ignored for they serve the interest of the greater majority. The clash of rights demands a delicate
balancing of interests approach which is a "fundamental postulate of constitutional law." xxv[25] The approach requires
that we "take conscious and detailed consideration of the interplay of interests observable in a given situation or type
of situation."xxvi[26] These interests usually consist in the exercise by an individual of his basic freedoms on the one
hand, and the governments promotion of fundamental public interest or policy objectives on the other.xxvii[27]

In the case at bar, on one end of the balancing pole is the private respondents claim to due process predicated
on Section 1, Article III of the Constitution, which provides that "No person shall be deprived of life, liberty, or
property without due process of law . . ." Without a bubble of doubt, procedural due process of law lies at the
foundation of a civilized society which accords paramount importance to justice and fairness. It has to be accorded
the weight it deserves.
This brings us to the other end of the balancing pole. Petitioner avers that the Court should give more weight to
our national commitment under the RP-US Extradition Treaty to expedite the extradition to the United States of
persons charged with violation of some of its laws. Petitioner also emphasizes the need to defer to the judgment of
the Executive on matters relating to foreign affairs in order not to weaken if not violate the principle of separation of
Considering that in the case at bar, the extradition proceeding is only at its evaluation stage, the nature
of the right being claimed by the private respondent is nebulous and the degree of prejudice he will allegedly
suffer is weak, we accord greater weight to the interests espoused by the government thru the petitioner
Secretary of Justice. In Angara v. Electoral Commission, we held that the "Constitution has blocked out with deft
strokes and in bold lines, allotment of power to the executive, the legislative and the judicial departments of the
government."xxviii[28] Under our constitutional scheme, executive power is vested in the President of the
Philippines.xxix[29] Executive power includes, among others, the power to contract or guarantee foreign loans and the
power to enter into treaties or international agreements.xxx[30] The task of safeguarding that these treaties are duly
honored devolves upon the executive department which has the competence and authority to so act in the
international arena.xxxi[31] It is traditionally held that the President has power and even supremacy over the countrys
foreign relations.xxxii[32] The executive department is aptly accorded deference on matters of foreign relations
considering the Presidents most comprehensive and most confidential information about the international scene of
which he is regularly briefed by our diplomatic and consular officials. His access to ultra-sensitive military
intelligence data is also unlimited. xxxiii[33] The deference we give to the executive department is dictated by the
principle of separation of powers. This principle is one of the cornerstones of our democratic government. It cannot
be eroded without endangering our government.
The Philippines also has a national interest to help in suppressing crimes and one way to do it is to facilitate the
extradition of persons covered by treaties duly entered by our government. More and more, crimes are becoming the
concern of one world. Laws involving crimes and crime prevention are undergoing universalization. One manifest
purpose of this trend towards globalization is to deny easy refuge to a criminal whose activities threaten the peace
and progress of civilized countries. It is to the great interest of the Philippines to be part of this irreversible
movement in light of its vulnerability to crimes, especially transnational crimes.
In tilting the balance in favor of the interests of the State, the Court stresses that it is not ruling that the
private respondent has no right to due process at all throughout the length and breadth of the extrajudicial
proceedings. Procedural due process requires a determination of what process is due, when it is due, and the degree
of what is due. Stated otherwise, a prior determination should be made as to whether procedural protections
are at all due and when they are due, which in turn depends on the extent to which an individual will be
"condemned to suffer grievous loss."xxxiv[34] We have explained why an extraditee has no right to notice and hearing
during the evaluation stage of the extradition process. As aforesaid, P.D. No. 1069 which implements the RP-US
Extradition Treaty affords an extraditee sufficient opportunity to meet the evidence against him once the petition
is filed in court. The time for the extraditee to know the basis of the request for his extradition is merely moved to
the filing in court of the formal petition for extradition. The extraditee's right to know is momentarily withheld
during the evaluation stage of the extradition process to accommodate the more compelling interest of the State to
prevent escape of potential extraditees which can be precipitated by premature information of the basis of the
request for his extradition. No less compelling at that stage of the extradition proceedings is the need to be more
deferential to the judgment of a co-equal branch of the government, the Executive, which has been endowed by our
Constitution with greater power over matters involving our foreign relations. Needless to state, this balance of
interests is not a static but a moving balance which can be adjusted as the extradition process moves from the
administrative stage to the judicial stage and to the execution stage depending on factors that will come into play. In
sum, we rule that the temporary hold on private respondent's privilege of notice and hearing is a soft restraint on
his right to due process which will not deprive him of fundamental fairness should he decide to resist the request
for his extradition to the United States. There is no denial of due process as long as fundamental fairness is
assured a party.

We end where we began. A myopic interpretation of the due process clause would not suffice to resolve the
conflicting rights in the case at bar. With the global village shrinking at a rapid pace, propelled as it is by
technological leaps in transportation and communication, we need to push further back our horizons and work with
the rest of the civilized nations and move closer to the universal goals of "peace, equality, justice, freedom,
cooperation and amity with all nations."xxxv[35] In the end, it is the individual who will reap the harvest of peace and
prosperity from these efforts.
WHEREFORE, the Urgent Motion for Reconsideration is GRANTED. The Decision in the case at bar
promulgated on January18, 2000 is REVERSED. The assailed Order issued by the public respondent judge on
August 9, 1999 is SET ASIDE. The temporary restraining order issued by this Court on August 17, 1999 is made
PERMANENT. The Regional Trial Court of Manila, Branch 25 is enjoined from conducting further proceedings in
Civil Case No. 99-94684.
Davide, Jr., C.J., Mendoza, Purisima, Pardo, Gonzaga-Reyes, and De Leon, Jr., JJ., concur.

G.R. No. 157977

February 27, 2006


17, GOVERNMENT OF THE UNITED STATES OF AMERICA, represented by the Philippine Department
Before us is a special civil action for certiorari and prohibition directed against the Orders dated May 7, 2003 1 and
May 9, 20032 of the Regional Trial Court of Manila, Branch 17 in Case No. 01-190375, which cancelled the bail of
petitioners and denied their motion for reconsideration, respectively.
The case stemmed from the petition for extradition filed on March 12, 2001 by the Government of the United States
of America (US government) through the Department of Justice (DOJ) against the petitioners.
After their arrest, petitioners applied for bail which the trial court granted on September 25, 2001. The bail was set
for one million pesos for each. Petitioners then posted cash bonds. The US government moved for reconsideration of
the grant of bail, but the motion was denied by the trial court. Unsatisfied, the US government filed a petition for
certiorari with this Court, entitled Government of the United States of America, represented by the Philippine
Department of Justice v. Hon. Rodolfo A. Ponferrada, etc., et al., and docketed as G.R. No. 151456.
Thereafter, we directed the trial court to resolve the matter of bail which, according to its November 28, 2001
Order,3 shall be subject to whatever ruling that this Court may have in the similar case of Mark Jimenez entitled
Government of the United States of America v. Purganan,4 docketed as G.R No. 148571. In compliance with our
directive, the trial court, without prior notice and hearing, cancelled the cash bond of the petitioners and ordered the
issuance of a warrant of arrest,5 to wit:
Accordingly, following the En Banc Decision of the Supreme Court in G.R. No. 148571 dated September 24, 2002
to the effect that extraditees are not entitled to bail while the extradition proceedings are pending (page 1, En

Banc Decision in G.R. No. 148571), let a warrant of arrest issue against the herein respondents sans any bail, for
implementation by the Sheriff or any member of any law enforcement agency in line with Section 19 of Presidential
Decree No. 1069.
Petitioners filed a very urgent motion for the reconsideration of the cancellation of their bail. The motion was heard
and denied on May 9, 2003.6
Having no alternative remedy, petitioners filed the present petition on the following grounds:
Once again we face the controversial matter of bail in extradition cases. We are asked to resolve twin issues: First, in
an extradition case, is prior notice and hearing required before bail is cancelled? Second, what constitutes a "special
circumstance" to be exempt from the no-bail rule in extradition cases?
Petitioners assert that their bail cannot be cancelled without due process of law. By way of analogy, they point to
Rule 114, Section 218 of the Rules of Court where the surety or bonding company is required to be notified and
allowed to show cause why the bail bond should not be cancelled. They say that if the rules grant this opportunity to
surety and bonding companies, the more reason then that in an extradition case the same should be afforded.
Petitioners also contend that this Courts directive in G.R. No. 151456 did not in any way authorize the respondent
court to cancel their bail. Petitioners aver that respondent court should have first determined the facts to evaluate if
petitioners were entitled to continuance of their bail, e.g. their willingness to go on voluntary extradition, which
respondent court should have considered a special circumstance.

Respondents, for their part, argue that prior notice and hearing are not required to cancel petitioners bail, and the
issuance of a warrant of arrest ex parte against an extraditee is not a violation of the due process clause. Further,
respondents maintain that prior notice and hearing would defeat the purpose of the arrest warrant since it could give
warning that respondents would be arrested and even encourage them to flee.
Besides, even granting that prior notice and hearing are indeed required, respondents contend that petitioners had
been effectively given prior notice and opportunity to be heard, because the trial courts order clearly stated that the
matter of bail shall be subject to whatever ruling the Supreme Court may render in the similar extradition case of
Government of the United States of America v. Purganan.9 Petitioners did not contest the aforementioned order.
Respondents declare that petitioners were likewise notified of this Courts directives to the trial court to resolve the
matter of their bail.
More significantly, petitioners claim that their bail should not have been cancelled since their situation falls within
the exception to the general rule of no-bail. They allege that their continuous offer for voluntary extradition is a
special circumstance that should be considered in determining that their temporary liberty while on bail be allowed
to continue. They cite that petitioner Eduardo is in fact already in the United States attending the trial. They also
have not taken flight as fugitives. Besides, according to petitioners, the State is more than assured they would not
flee because their passports were already confiscated and there is an existing hold-departure order against them.
Moreover, petitioners assert, they are not a danger to the community.
Respondents counter that petitioner Imelda Gener Rodriguez did not show her good faith by her continued refusal to
appear before the respondent court. Further, the reasons of petitioners do not qualify as compelling or special
circumstances. Moreover, the special circumstance of voluntary surrender of petitioner Eduardo is separate and
distinct from petitioner Imeldas.
Additionally, respondents maintain that the ruling in the case of Atong Ang10 has no applicability in the instant case.
Angs bail was allowed because the English translation of a testimony needed to determine probable cause in Angs
case would take time. This special circumstance is not attendant in this case.
The issue of prior notice and hearing in extradition cases is not new. In Secretary of Justice v. Lantion,11 by a vote of
nine to six, we initially ruled that notice and hearing should be afforded the extraditee even when a possible
extradition is still being evaluated.12 The Court, deliberating on a motion for reconsideration also by a vote of nine to
six, qualified and declared that prospective extraditees are entitled to notice and hearing only when the case is filed
in court and not during the process of evaluation.13
In the later case of Purganan, eight justices concurred that a possible extraditee is not entitled to notice and hearing
before the issuance of a warrant of arrest while six others dissented.
Now, we are confronted with the question of whether a prospective extraditee is entitled to notice and hearing before
the cancellation of his or her bail.
The issue has become moot and academic insofar as petitioner Eduardo Rodriguez is concerned. He is now in the
USA facing the charges against him. But co-petitioner Imelda Gener Rodriguez is here and stands on a different
footing. We agree that her bail should be restored.
In Purganan, we said that a prospective extraditee is not entitled to notice and hearing before the issuance of a
warrant of arrest,14 because notifying him before his arrest only tips him of his pending arrest. But this is for cases
pending the issuance of a warrant of arrest, not in a cancellation of a bail that had been issued after determination

that the extraditee is a no-flight risk. The policy is that a prospective extraditee is arrested and detained to avoid his
flight from justice.15 On the extraditee lies the burden of showing that he will not flee once bail is granted. 16 If after
his arrest and if the trial court finds that he is no flight risk, it grants him bail. The grant of the bail, presupposes that
the co-petitioner has already presented evidence to prove her right to be on bail, that she is no flight risk, and the
trial court had already exercised its sound discretion and had already determined that under the Constitution and
laws in force, co-petitioner is entitled to provisional release.
Under these premises, and with the trial courts knowledge that in this case, co-petitioner has offered to go on
voluntary extradition; that she and her husband had posted a cash bond of P1 million each; that her husband had
already gone on voluntary extradition and is presently in the USA undergoing trial; that the passport of co-petitioner
is already in the possession of the authorities; that she never attempted to flee; that there is an existing holddeparture order against her; and that she is now in her sixties, sickly and under medical treatment, we believe that
the benefits of continued temporary liberty on bail should not be revoked and their grant of bail should not be
cancelled, without the co-petitioner being given notice and without her being heard why her temporary liberty
should not be discontinued.
We emphasize that bail may be granted to a possible extraditee only upon a clear and convincing showing (1) that he
will not be a flight risk or a danger to the community, and (2) that there exist special, humanitarian and compelling
The trial courts immediate cancellation of the bail of petitioners is contrary to our ruling in Purganan, and it had
misread and misapplied our directive therein.
Now, was the order to issue warrant of arrest against petitioners and to cancel the bail of extraditees a grave abuse of
discretion of the trial court?
Grave abuse of discretion is capricious or whimsical exercise of judgment that is patent and gross as to amount to an
evasion of positive duty or a virtual refusal to perform a duty enjoined by law.18 In our view, the cancellation of copetitioners bail, without prior notice and hearing, could be considered a violation of co-petitioners right to due
process tantamount to grave abuse of discretion.
Finally, considering that remanding the case to the court a quo will only delay the final resolution of the case as in
all probability it would only end up with us again,19 we will decide if Imeldas bail was validly cancelled.
In Purganan, we held also that the grounds used by the highest court in the requesting state for the grant of bail may
be considered, under the principle of reciprocity.20
Considering that she has not been shown to be a flight risk nor a danger to the community, she is entitled to notice
and hearing before her bail could be cancelled. Based on the record, we find that, absent prior notice and hearing,
the bails cancellation was in violation of her right to due process.
WHEREFORE, the instant petition is GRANTED IN PART. The Orders dated May 7, 2003 and May 9, 2003 of the
Regional Trial Court of Manila, Branch 17 in Case No. 01-190375 are REVERSED and SET ASIDE, as far as
petitioner IMELDA GENER RODRIGUEZ is concerned. We hereby (1) declare IMELDA GENER RODRIGUEZ
entitled to bail, (2) order her cancelled bail restored, and (3) order the warrant for her arrest revoked.

[G.R. No. 148571. September 24, 2002]

GOVERNMENT OF THE UNITED STATES OF AMERICA, represented by the Philippine Department of

Justice, petitioner, vs. Hon. GUILLERMO G. PURGANAN, Morales, and Presiding Judge, Regional
Trial Court of Manila, Branch 42; and MARK B. JIMENEZ a.k.a. MARIO BATACAN CRESPO,
In extradition proceedings, are prospective extraditees entitled to notice and hearing before warrants for their
arrest can be issued? Equally important, are they entitled to the right to bail and provisional liberty while the
extradition proceedings are pending? In general, the answer to these two novel questions is No. The explanation
of and the reasons for, as well as the exceptions to, this rule are laid out in this Decision.

The Case
Before us is a Petition for Certiorari under Rule 65 of the Rules of Court, seeking to void and set aside the
Orders dated May 23, 2001xxxvi[1] and July 3, 2001xxxvii[2] issued by the Regional Trial Court (RTC) of Manila, Branch
42.xxxviii[3] The first assailed Order set for hearing petitioners application for the issuance of a warrant for the arrest of
Respondent Mark B. Jimenez.
The second challenged Order, on the other hand, directed the issuance of a warrant, but at the same time
granted bail to Jimenez. The dispositive portion of the Order reads as follows:
WHEREFORE, in the light of the foregoing, the [Court] finds probable cause against respondent
Mark Jimenez. Accordingly let a Warrant for the arrest of the respondent be issued. Consequently and
taking into consideration Section 9, Rule 114 of the Revised Rules of Criminal Procedure, this Court fixes
the reasonable amount of bail for respondents temporary liberty at ONE MILLION PESOS (Php
1,000,000.00), the same to be paid in cash.
Furthermore respondent is directed to immediately surrender to this Court his passport and the
Bureau of Immigration and Deportation is likewise directed to include the name of the respondent in its
Hold Departure List.xxxix[4]
Essentially, the Petition prays for the lifting of the bail Order, the cancellation of the bond, and the taking of
Jimenez into legal custody.

The Facts
This Petition is really a sequel to GR No. 139465 entitled Secretary of Justice v. Ralph C. Lantion.xl[5]
Pursuant to the existing RP-US Extradition Treaty,xli[6] the United States Government, through diplomatic
channels, sent to the Philippine Government Note Verbale No. 0522 dated June 16, 1999, supplemented by Note
Nos. 0597, 0720 and 0809 and accompanied by duly authenticated documents requesting the extradition of Mark B.

Jimenez, also known as Mario Batacan Crespo. Upon receipt of the Notes and documents, the secretary of foreign
affairs (SFA) transmitted them to the secretary of justice (SOJ) for appropriate action, pursuant to Section 5 of
Presidential Decree (PD) No. 1069, also known as the Extradition Law.
Upon learning of the request for his extradition, Jimenez sought and was granted a Temporary Restraining
Order (TRO) by the RTC of Manila, Branch 25. xlii[7] The TRO prohibited the Department of Justice (DOJ) from
filing with the RTC a petition for his extradition. The validity of the TRO was, however, assailed by the SOJ in a
Petition before this Court in the said GR No. 139465. Initially, the Court -- by a vote of 9-6 -- dismissed the
Petition. The SOJ was ordered to furnish private respondent copies of the extradition request and its supporting
papers and to grant the latter a reasonable period within which to file a comment and supporting evidence. xliii[8]
Acting on the Motion for Reconsideration filed by the SOJ, this Court issued its October 17, 2000
Resolution.xliv[9] By an identical vote of 9-6 -- after three justices changed their votes -- it reconsidered and reversed
its earlier Decision. It held that private respondent was bereft of the right to notice and hearing during the evaluation
stage of the extradition process. This Resolution has become final and executory.
Finding no more legal obstacle, the Government of the United States of America, represented by the Philippine
DOJ, filed with the RTC on May 18, 2001, the appropriate Petition for Extradition which was docketed as
Extradition Case No. 01192061. The Petition alleged, inter alia, that Jimenez was the subject of an arrest warrant
issued by the United States District Court for the Southern District of Florida on April 15, 1999. The warrant had
been issued in connection with the following charges in Indictment No. 99-00281 CR-SEITZ: (1) conspiracy to
defraud the United States and to commit certain offenses in violation of Title 18 US Code Section 371; (2) tax
evasion, in violation of Title 26 US Code Section 7201; (3) wire fraud, in violation of Title 18 US Code Sections
1343 and 2; (4) false statements, in violation of Title 18 US Code Sections 1001 and 2; and (5) illegal campaign
contributions, in violation of Title 2 US Code Sections 441b, 441f and 437g(d) and Title 18 US Code Section 2. In
order to prevent the flight of Jimenez, the Petition prayed for the issuance of an order for his immediate arrest
pursuant to Section 6 of PD No. 1069.
Before the RTC could act on the Petition, Respondent Jimenez filed before it an Urgent Manifestation/ExParte Motion,xlv[10] which prayed that petitioners application for an arrest warrant be set for hearing.
In its assailed May 23, 2001 Order, the RTC granted the Motion of Jimenez and set the case for hearing on
June 5, 2001. In that hearing, petitioner manifested its reservations on the procedure adopted by the trial court
allowing the accused in an extradition case to be heard prior to the issuance of a warrant of arrest.
After the hearing, the court a quo required the parties to submit their respective memoranda. In his
Memorandum, Jimenez sought an alternative prayer: that in case a warrant should issue, he be allowed to post bail in
the amount of P100,000.
The alternative prayer of Jimenez was also set for hearing on June 15, 2001. Thereafter, the court below issued
its questioned July 3, 2001 Order, directing the issuance of a warrant for his arrest and fixing bail for his temporary
liberty at one million pesos in cash. xlvi[11] After he had surrendered his passport and posted the required cash bond,
Jimenez was granted provisional liberty via the challenged Order dated July 4, 2001.xlvii[12]
Hence, this Petition.xlviii[13]

Petitioner presents the following issues for the consideration of this Court:
The public respondent acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction in adopting a procedure of first hearing a potential extraditee
before issuing an arrest warrant under Section 6 of PD No. 1069.

The public respondent acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction in granting the prayer for bail and in allowing Jimenez to go
on provisional liberty because:
1. An extradition court has no power to authorize bail, in the absence of any law that provides for
such power.
2. Section 13, Article III (right to bail clause) of the 1987 Philippine Constitution and Section 4,
Rule 114 (Bail) of the Rules of Court, as amended, which [were] relied upon, cannot be used as bases for
allowing bail in extradition proceedings.
3. The presumption is against bail in extradition proceedings or proceedings leading to extradition.
4. On the assumption that bail is available in extradition proceedings or proceedings leading to
extradition, bail is not a matter of right but only of discretion upon clear showing by the applicant of the
existence of special circumstances.
5. Assuming that bail is a matter of discretion in extradition proceedings, the public respondent
received no evidence of special circumstances which may justify release on bail.
6. The risk that Jimenez will flee is high, and no special circumstance exists that will engender a
well-founded belief that he will not flee.
7. The conditions attached to the grant of bail are ineffectual and do not ensure compliance by the
Philippines with its obligations under the RP-US Extradition Treaty.
8. The Court of Appeals Resolution promulgated on May 10, 2001 in the case entitled Eduardo T.
Rodriguez et al. vs. The Hon. Presiding Judge, RTC, Branch 17, Manila, CA-G.R. SP No. 64589, relied
upon by the public respondent in granting bail, had been recalled before the issuance of the subject bail
In sum, the substantive questions that this Court will address are: (1) whether Jimenez is entitled to notice and
hearing before a warrant for his arrest can be issued, and (2) whether he is entitled to bail and to provisional liberty
while the extradition proceedings are pending. Preliminarily, we shall take up the alleged prematurity of the Petition
for Certiorari arising from petitioners failure to file a Motion for Reconsideration in the RTC and to seek relief in
the Court of Appeals (CA), instead of in this Court. l[15] We shall also preliminarily discuss five extradition postulates
that will guide us in disposing of the substantive issues.

The Courts Ruling

The Petition is meritorious.

Preliminary Matters
Alleged Prematurity of Present Petition
Petitioner submits the following justifications for not filing a Motion for Reconsideration in the Extradition
Court: (1) the issues were fully considered by such court after requiring the parties to submit their respective
memoranda and position papers on the matter and thus, the filing of a reconsideration motion would serve no useful
purpose; (2) the assailed orders are a patent nullity, absent factual and legal basis therefor; and (3) the need for relief
is extremely urgent, as the passage of sufficient time would give Jimenez ample opportunity to escape and avoid
extradition; and (4) the issues raised are purely of law.li[16]
For resorting directly to this Court instead of the CA, petitioner submits the following reasons: (1) even if the
petition is lodged with the Court of Appeals and such appellate court takes cognizance of the issues and decides

them, the parties would still bring the matter to this Honorable Court to have the issues resolved once and for all
[and] to have a binding precedent that all lower courts ought to follow; (2) the Honorable Court of Appeals had in
one caselii[17] ruled on the issue by disallowing bail but the court below refused to recognize the decision as a judicial
guide and all other courts might likewise adopt the same attitude of refusal; and (3) there are pending issues on bail
both in the extradition courts and the Court of Appeals, which, unless guided by the decision that this Honorable
Court will render in this case, would resolve to grant bail in favor of the potential extraditees and would give them
opportunity to flee and thus, cause adverse effect on the ability of the Philippines to comply with its obligations
under existing extradition treaties.liii[18]
As a general rule, a petition for certiorari before a higher court will not prosper unless the inferior court has
been given, through a motion for reconsideration, a chance to correct the errors imputed to it. This rule, though, has
certain exceptions: (1) when the issue raised is purely of law, (2) when public interest is involved, or (3) in case of
urgency.liv[19] As a fourth exception, the Court has also ruled that the filing of a motion for reconsideration before
availment of the remedy of certiorari is not a sine qua non, when the questions raised are the same as those that have
already been squarely argued and exhaustively passed upon by the lower court. lv[20] Aside from being of this nature,
the issues in the present case also involve pure questions of law that are of public interest. Hence, a motion for
reconsideration may be dispensed with.
Likewise, this Court has allowed a direct invocation of its original jurisdiction to issue writs of certiorari when
there are special and important reasons therefor.lvi[21] In Fortich v. Coronalvii[22]we stated:
[T]he Supreme Court has the full discretionary power to take cognizance of the petition filed
directly [before] it if compelling reasons, or the nature and importance of the issues raised, warrant. This
has been the judicial policy to be observed and which has been reiterated in subsequent cases, namely: Uy
vs. Contreras, et. al., Torres vs. Arranz, Bercero vs. De Guzman, and, Advincula vs. Legaspi, et. al. As we
have further stated in Cuaresma:
x x x. A direct invocation of the Supreme Courts original jurisdiction to issue these
writs should be allowed only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is established policy. x x x.
Pursuant to said judicial policy, we resolve to take primary jurisdiction over the present petition in
the interest of speedy justice and to avoid future litigations so as to promptly put an end to the present
controversy which, as correctly observed by petitioners, has sparked national interest because of the
magnitude of the problem created by the issuance of the assailed resolution. Moreover, x x x requiring
the petitioners to file their petition first with the Court of Appeals would only result in a waste of time and
That the Court has the power to set aside its own rules in the higher interests of justice is wellentrenched in our jurisprudence. We reiterate what we said in Piczon vs. Court of Appeals:lviii[23]
Be it remembered that rules of procedure are but mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in technicalities
that tend to frustrate rather than promote substantial justice, must always be avoided. Time
and again, this Court has suspended its own rules and excepted a particular case from their
operation whenever the higher interests of justice so require. In the instant petition, we forego
a lengthy disquisition of the proper procedure that should have been taken by the parties
involved and proceed directly to the merits of the case.
In a number of other exceptional cases,lix[24] we held as follows:
This Court has original jurisdiction, concurrent with that of Regional Trial Courts and the Court of
Appeals, over petitions for certiorari, prohibition, mandamus, quo warranto and habeas corpus, and we
entertain direct resort to us in cases where special and important reasons or exceptional and compelling
circumstances justify the same.
In the interest of justice and to settle once and for all the important issue of bail in extradition proceedings, we
deem it best to take cognizance of the present case. Such proceedings constitute a matter of first impression over
which there is, as yet, no local jurisprudence to guide lower courts.

Five Postulates of Extradition

The substantive issues raised in this case require an interpretation or construction of the treaty and the law on
extradition. A cardinal rule in the interpretation of a treaty or a law is to ascertain and give effect to its intent. lx[25]
Since PD 1069 is intended as a guide for the implementation of extradition treaties to which the Philippines is a
signatory,lxi[26] understanding certain postulates of extradition will aid us in properly deciding the issues raised here.
1. Extradition Is a Major Instrument for the Suppression of Crime.
First, extradition treaties are entered into for the purpose of suppressing crime lxii[27] by facilitating the arrest and
the custodial transferlxiii[28] of a fugitivelxiv[29] from one state to the other.
With the advent of easier and faster means of international travel, the flight of affluent criminals from one
country to another for the purpose of committing crime and evading prosecution has become more frequent.
Accordingly, governments are adjusting their methods of dealing with criminals and crimes that transcend
international boundaries.
Today, a majority of nations in the world community have come to look upon extradition as the major
effective instrument of international co-operation in the suppression of crime.lxv[30] It is the only regular system that
has been devised to return fugitives to the jurisdiction of a court competent to try them in accordance with municipal
and international law.lxvi[31]
An important practical effect x x x of the recognition of the principle that criminals should be
restored to a jurisdiction competent to try and punish them is that the number of criminals seeking refuge
abroad will be reduced. For to the extent that efficient means of detection and the threat of punishment
play a significant role in the deterrence of crime within the territorial limits of a State, so the existence of
effective extradition arrangements and the consequent certainty of return to the locus delicti commissi
play a corresponding role in the deterrence of flight abroad in order to escape the consequence of crime.
x x x. From an absence of extradition arrangements flight abroad by the ingenious criminal receives
direct encouragement and thus indirectly does the commission of crime itself.lxvii[32]
In Secretary v. Lantionlxviii[33] we explained:
The Philippines also has a national interest to help in suppressing crimes and one way to do it is to
facilitate the extradition of persons covered by treaties duly entered [into] by our government. More and
more, crimes are becoming the concern of one world. Laws involving crimes and crime prevention are
undergoing universalization. One manifest purpose of this trend towards globalization is to deny easy
refuge to a criminal whose activities threaten the peace and progress of civilized countries. It is to the
great interest of the Philippines to be part of this irreversible movement in light of its vulnerability to
crimes, especially transnational crimes.
Indeed, in this era of globalization, easier and faster international travel, and an expanding ring of international
crimes and criminals, we cannot afford to be an isolationist state. We need to cooperate with other states in order to
improve our chances of suppressing crime in our own country.
2. The Requesting State Will Accord Due Process to the Accused
Second, an extradition treaty presupposes that both parties thereto have examined, and that both accept and
trust, each others legal system and judicial process. lxix[34] More pointedly, our duly authorized representatives
signature on an extradition treaty signifies our confidence in the capacity and the willingness of the other state to
protect the basic rights of the person sought to be extradited. lxx[35] That signature signifies our full faith that the
accused will be given, upon extradition to the requesting state, all relevant and basic rights in the criminal
proceedings that will take place therein; otherwise, the treaty would not have been signed, or would have been
directly attacked for its unconstitutionality.
3. The Proceedings Are Sui Generis
Third, as pointed out in Secretary of Justice v. Lantion,lxxi[36] extradition proceedings are not criminal in nature.
In criminal proceedings, the constitutional rights of the accused are at fore; in extradition which is sui generis -- in a
class by itself -- they are not.

An extradition [proceeding] is sui generis. It is not a criminal proceeding which will call into
operation all the rights of an accused as guaranteed by the Bill of Rights. To begin with, the process of
extradition does not involve the determination of the guilt or innocence of an accused. His guilt or
innocence will be adjudged in the court of the state where he will be extradited. Hence, as a rule,
constitutional rights that are only relevant to determine the guilt or innocence of an accused cannot be
invoked by an extraditee x x x.

US v. Ruiz (Consti1)
US v. Ruiz
GOHIER, petitioners, vs. HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal
and ELIGIO DE GUZMAN & CO., INC., respondents.
En Banc
Doctrine: implied consent
Date: May 22, 1985
Ponente: Justice Abad-Santos


At times material to this case, the United States of America had a naval base in Subic, Zambales.
The base was one of those provided in the Military Bases Agreement between the Philippines
and the United States.

US invited the submission of bids for Repair offender system and Repair typhoon damages. Eligio
de Guzman & Co., Inc. responded to the invitation, submitted bids and complied with the requests
based on the letters received from the US.

In June 1972, a letter was received by the Eligio De Guzman & Co indicating that the company
did not qualify to receive an award for the projects because of its previous unsatisfactory
performance rating on a repair contract for the sea wall at the boat landings of the U.S. Naval
Station in Subic Bay.

The company sued the United States of America and Messrs. James E. Galloway, William I.
Collins and Robert Gohier all members of the Engineering Command of the U.S. Navy. The
complaint is to order the defendants to allow the plaintiff to perform the work on the projects and,
in the event that specific performance was no longer possible, to order the defendants to pay
damages. The company also asked for the issuance of a writ of preliminary injunction to restrain
the defendants from entering into contracts with third parties for work on the projects.

The defendants entered their special appearance for the purpose only of questioning the
jurisdiction of this court over the subject matter of the complaint and the persons of defendants,
the subject matter of the complaint being acts and omissions of the individual defendants as
agents of defendant United States of America, a foreign sovereign which has not given her
consent to this suit or any other suit for the causes of action asserted in the complaint." (Rollo, p.

Subsequently the defendants filed a motion to dismiss the complaint which included an opposition
to the issuance of the writ of preliminary injunction. The company opposed the motion.

The trial court denied the motion and issued the writ. The defendants moved twice to reconsider
but to no avail.

Hence the instant petition which seeks to restrain perpetually the proceedings in Civil Case No.
779-M for lack of jurisdiction on the part of the trial court.


WON the US naval base in bidding for said contracts exercise governmental functions to be able
to invoke state immunity

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and
Civil Case No. is dismissed. Costs against the private respondent.


The traditional rule of State immunity exempts a State from being sued in the courts of another
State without its consent or waiver. This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of International Law are not petrified;
they are constantly developing and evolving. And because the activities of states have multiplied,
it has been necessary to distinguish them-between sovereign and governmental acts (jure
imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State
immunity now extends only to acts jure imperil (sovereign & governmental acts)

The restrictive application of State immunity is proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its commercial activities or economic affairs.
Stated differently, a State may be said to have descended to the level of an individual and can
thus be deemed to have tacitly given its consent to be sued only when it enters into business
contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In
this case the projects are an integral part of the naval base which is devoted to the defense of
both the United States and the Philippines, indisputably a function of the government of the
highest order; they are not utilized for nor dedicated to commercial or business purposes.

correct test for the application of State immunity is not the conclusion of a contract by a State but
the legal nature of the act

G.R. No. 79253 March 1, 1993

HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite,
and NELIA T. MONTOYA, respondents.
Luna, Sison & Manas for petitioners.
Evelyn R. Dominguez for private respondent.
This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court. Petitioners
would have Us annul and set aside, for having been issued with grave abuse of discretion
amounting to lack of jurisdiction, the Resolution of 17 July 1987 of Branch 22 of the Regional
Trial Court (RTC) of Cavite in Civil Case No. 224-87. The said resolution denied, for lack of
merit, petitioners' motion to dismiss the said case and granted the private respondent's motion for
the issuance of a writ of preliminary attachment. Likewise sought to be set aside is the writ of
attachment subsequently issued by the RTC on 28 July 1987.
The doctrine of state immunity is at the core of this controversy.
The readings disclose the following material operative facts:
Private respondent, hereinafter referred to as Montoya, is an American citizen who, at the time
material to this case, was employed as an identification (I.D.) checker at the U.S. Navy Exchange
(NEX) at the Joint United States Military Assistance Group (JUSMAG) headquarters in Quezon
City. She is married to one Edgardo H. Montoya, a Filipino-American serviceman employed by
the U.S. Navy and stationed in San Francisco, California. Petitioner Maxine Bradford, hereinafter
referred to as Bradford, is likewise an American citizen who was the activity exchange manager at
the said JUSMAG Headquarters.
As a consequence of an incident which occurred on 22 January 1987 whereby her body and
belongings were searched after she had bought some items from the retail store of the NEX
JUSMAG, where she had purchasing privileges, and while she was already at the parking area,
Montoya filed on
7 May 1987 a complaint 1 with the Regional Trial Court of her place of residence Cavite
against Bradford for damages due to the oppressive and discriminatory acts committed by the
latter in excess of her authority as store manager of the NEX JUSMAG. The complaint, docketed
as Civil Case No. 224-87 and subsequently raffled off to Branch 22 at Imus, Cavite, alleges the
following, material operative facts:
xxx xxx xxx
3. That on January 22, 1987, after working as the duty ID checker from 7:45 to 11:45 a.m.,
plaintiff went shopping and left the store at l2:00 noon of that day;
4. That on the way to her car while already outside the store, Mrs. Yong Kennedy, also an ID
checker, upon the instruction of the store manager, Ms. Maxine Bradford, approached plaintiff and
informed her that she needed to search her bags;
5. That plaintiff went to defendant, who was then outside the store talking to some men, to protest
the search but she was informed by the defendant that the search is to be made on all Jusmag
employees that day;
6. That the search was thereafter made on the person, car and bags of the plaintiff by Mrs. Yong
Kennedy in the presence of the defendant and numerous curious onlookers;
7. That having found nothing irregular on her person and belongings, plaintiff was allowed to
leave the premises;

8. That feeling aggrieved, plaintiff checked the records and discovered that she was the only one
whose person and belonging was (sic) searched that day contrary to defendant's allegation as set
forth in par. 5 hereof and as evidenced by the memorandum dated January 30, 1987 made by other
Filipino Jusmag employees, a photocopy of which is hereto attached as ANNEX "A" and made
integral (sic) part hereof:
9. That moreover, a check with Navy Exchange Security Manager, R.L. Roynon on January 27,
1987 was made and she was informed by Mr. Roynon that it is a matter of policy that customers
and employees of NEX Jusmag are not searched outside the store unless there is a very strong
evidence of a wrongdoing;
10. That plaintiff knows of no circumstances sufficient to trigger suspicion of a wrongdoing on her
part but on the other hand, is aware of the propensity of defendant to lay suspicion on Filipinos for
theft and/or shoplifting;
11. That plaintiff formally protested the illegal search on February 14, 1987 in a letter addressed to
Mr. R.L. Roynon, a photocopy of which is hereto attached as ANNEX "B" and made integral (sic)
part hereof; but no action was undertaken by the said officer;
12. That the illegal search on the person and belongings of the plaintiff in front of many people has
subjected the plaintiff to speculations of theft, shoplifting and such other wrongdoings and has
exposed her to contempt and ridicule which was caused her undue embarrassment and indignity;
13. That since the act could not have been motivated by other (sic) reason than racial
discrimination in our own land, the act constitute (sic) a blow to our national pride and dignity
which has caused the plaintiff a feeling of anger for which she suffers sleepless nights and
wounded feelings;
14. That considering the above, plaintiff is entitled to be compensated by way of moral damages in
the amount of P500,000.00;
15. That to serve as a deterrent to those inclined to follow the oppressive act of the defendant,
exemplary damages in the amount of P100,000.00 should also be awarded. 2
She then prayed for judgment ordering Bradford to pay her P500,000.00 as moral damages,
P100,000.00 as exemplary damages and reasonable attorney's fees plus the costs of the suit. 3
Summons and a copy of the complaint were served on Bradford on 13 May 1987. In response
thereto, she filed two (2) motions for extension of time to file her Answer which were both granted
by the trial court. The first was filed through Atty. Miguel Famularcano, Jr., who asked for a 20day extension from 28 May 1987. The second, filed through the law firm of Luna, Sison and
Manas, sought a 15-day extension from 17 June 1987. 4 Thus, Bradford had up to 1 July 1987 to
file her Answer. Instead of doing so, however, she, together with the government of the United
States of America (hereinafter referred to as the public petitioner), filed on 25 June 1987, also
through the law firm of Luna, Sison and Manas, a Motion to Dismiss 5 based on the following
1) (This) action is in effect a suit against the United States of America, a foreign sovereign
immune from suit without its consent for the cause of action pleaded in the complaint; and
2) Defendant, Maxine Bradford, as manager of the US Navy Exchange Branch at JUSMAG,
Quezon City, is immune from suit for act(s) done by her in the performance of her official
functions under the Philippines-United States Military Assistance Agreement of 1947 and Military
Bases Agreement of 1947, as amended. 6
In support of the motion, the petitioners claimed that JUSMAG, composed of an Army, Navy and
Air Group, had been established under the Philippine-United States Military Assistance
Agreement entered into on 21 March 1947 to implement the United States' program of rendering
military assistance to the Philippines. Its headquarters in Quezon City is considered a temporary
installation under the provisions of Article XXI of the Military Bases Agreement of 1947.
Thereunder, "it is mutually agreed that the United States shall have the rights, power and authority
within the bases which are necessary for the establishment, use and operation and defense thereof
or appropriate for the control thereof." The 1979 amendment of the Military Bases Agreement
made it clear that the United States shall have "the use of certain facilities and areas within the
bases and shall have effective command and control over such facilities and over United States
personnel, employees, equipment and material." JUSMAG maintains, at its Quezon City

headquarters, a Navy Exchange referred to as the NEX-JUSMAG. Checking of purchases at the

NEX is a routine procedure observed at base retail outlets to protect and safeguard merchandise,
cash and equipment pursuant to paragraphs 2 and 4(b) of NAVRESALEACT SUBIC INST.
5500.1. 7 Thus, Bradford's order to have purchases of all employees checked on 22 January 1987
was made in the exercise of her duties as Manager of the NEX-JUSMAG.
They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S.
Government, is considered essential for the performance of governmental functions. Its mission is
to provide a convenient and reliable source, at the lowest practicable cost, of articles and services
required for the well-being of Navy personnel, and of funds to be used for the latter's welfare and
recreation. Montoya's complaint, relating as it does to the mission, functions and responsibilities
of a unit of the United States Navy, cannot then be allowed. To do so would constitute a violation
of the military bases agreement. Moreover, the rights, powers and authority granted by the
Philippine government to the United States within the U.S. installations would be illusory and
academic unless the latter has effective command and control over such facilities and over
American personnel, employees, equipment and material. Such rights, power and authority within
the bases can only be exercised by the United States through the officers and officials of its armed
forces, such as Bradford. Baer vs. Tizon 8 and United States of America vs.
Ruiz 9 were invoked to support these claims.
On 6 July 1987, Montoya filed a motion for preliminary attachment 10 on the ground that Bradford
was about to depart from the country and was in the process of removing and/or disposing of her
properties with intent to defraud her creditors. On 14 July 1987, Montoya filed her opposition to
the motion to dismiss 11 alleging therein that the grounds proffered in the latter are bereft of merit
because (a) Bradford, in ordering the search upon her person and belongings outside the NEX
JUSMAG store in the presence of onlookers, had committed an improper, unlawful and highly
discriminatory act against a Filipino employee and had exceeded the scope of her authority; (b)
having exceeded her authority, Bradford cannot rely on the sovereign immunity of the public
petitioner because her liability is personal; (c) Philippine courts are vested with jurisdiction over
the case because Bradford is a civilian employee who had committed the challenged act outside
the U.S. Military Bases; such act is not one of those exempted from the jurisdiction of Philippine
courts; and (d) Philippine courts can inquire into the factual circumstances of the case to determine
whether or not Bradford had acted within or outside the scope of her authority.
On 16 July 1987, public petitioner and Bradford filed a reply to Montoya's opposition and an
opposition to the motion for preliminary attachment. 12
On 17 July 1987, 13 the trial court 14 resolved both the motion to dismiss and the motion for
preliminary attachment in this wise:
On the motion to dismiss, the grounds and arguments interposed for the dismissal of this case are
determined to be not indubitable. Hence, the motion is denied for lack of merit.
The motion for preliminary attachment is granted in the interest of justice, upon the plaintiff's
filing of a bond in the sum of P50,000.00.
Upon Montoya's filing of the required bond, the trial court issued on 28 July 1987 an Order 15
decreeing the issuance of a writ of attachment and directing the sheriff to serve the writ
immediately at the expense of the private respondent. The writ of attachment was issued on that
same date. 16
Instead of filing a motion to reconsider the last two (2) orders, or an answer insofar as Bradford
is concerned both the latter and the public petitioner filed on 6 August 1987 the instant petition
to annul and set aside the above Resolution of 17 July 1987 and the writ of attachment issued
pursuant thereto. As grounds therefor, they allege that:
10. The respondent judge committed a grave abuse of discretion amounting to lack of jurisdiction
in denying the motion to dismiss the complaint in Civil Case No. 224-87 "for lack of merit." For
the action was in effect a suit against the United States of America, a foreign sovereign immune
from suit without its consent for the cause of action pleaded in the complaint, while its copetitioner was immune from suit for act(s) done by her in the performance of her official functions
as manager of the US Navy Exchange Branch at the Headquarters of JUSMAG, under the
Philippines-United States Military Assistance Agreement of 1947 and Military Bases Agreement
of 1947, as amended. 17

On 5 August 1987, the trial court set Civil Case No. 224-87 for pre-trial and trial on 27 August
1987 at 9:30 a.m. 18
On 12 August 1987, this Court resolved to require the respondents to comment on the petition. 19
On 19 August 1987, petitioners filed with the trial court a Motion
to Suspend Proceedings 20 which the latter denied in its Order of 21 August 1987. 21
In the meantime, however, for failure to file an answer, Bradford was declared in default in Civil
Case No. 224-87 and Montoya was allowed to present her evidence ex-parte. 22 She thus took the
witness stand and presented Mrs. Nam Thi Moore and Mrs. Miss Yu as her witnesses.
On 10 September 1987, the trial court rendered its decision 23 in Civil Case No. 224-87, the
dispositive portion of which reads:
Prescinding from the foregoing, it is hereby determined that the unreasonable search on the
plaintiff's person and bag caused (sic) done recklessly and oppressively by the defendant, violated,
impaired and undermined the plaintiff's liberty guaranteed by the Constitution, entitling her to
moral and exemplary damages against the defendant. The search has unduly subjected the plaintiff
to intense humiliation and indignities and had consequently ridiculed and embarrassed publicly
said plaintiff so gravely and immeasurably.
WHEREFORE, judgment is hereby rendered for the plaintiff and against the defendant Maxine
Bradford assessing the latter to pay unto the former the sums of P300,000.00 for moral damages,
P100,000.00 for exemplary damages and P50,000.00 for actual expenses and attorney's fees.
No costs.
Bradford received a copy of the decision on 21 September 1987. On that same date, she and the
public petitioner filed with this Court a Petition for Restraining Order 25 which sought to have the
trial court's decision vacated and to prevent the execution of the same; it was also prayed that the
trial court be enjoined from continuing with Civil Case No. 224-87. We noted this pleading in the
Resolution of 23 September 1987. 26
In the meantime, since no motion for reconsideration or appeal had been interposed by Bradford
challenging the 10 September 1987 Decision which she had received on 21 September 1987,
respondent Judge issued on 14 October 1987 an order directing that an entry of final judgment be
made. A copy thereof was received by Bradford on 21 October, 1987. 27
Also on 14 October 1987, Montoya filed her Comment with Opposition to the Petition for
Restraining Order. 28 Respondent Judge had earlier filed his own Comment to the petition on 14
September 1987. 29
On 27 October 1987, Montoya filed before the trial court a motion for the execution of the
Decision of 10 September 1987 which petitioners opposed on the ground that although this Court
had not yet issued in this case a temporary restraining order, it had nevertheless resolved to require
the respondents to comment on the petition. It was further averred that execution thereof would
cause Bradford grave injury; moreover, enforcement of a writ of execution may lead to regrettable
incidents and unnecessarily complicate the situation in view of the public petitioner's position on
the issue of the immunity of its employees. In its Resolution of 11 November 1987, the trial court
directed the issuance of a writ of execution. 30
Consequently, the petitioners filed on 4 December 1987, a Manifestation and Motion reciting the
foregoing incidents obtaining before the trial court and praying that their petition for a restraining
order be resolved. 31
On 7 December 1987, this Court issued a Temporary Restraining Order "ENJOINING the
respondents and the Provincial Sheriff of Pasig, Metro Manila, from enforcing the Decision dated
September 10, 1987, and the Writs of Attachment and Execution issued in Civil Case No. 224-87."

On 28 November 1988, after the private respondent filed a Rejoinder to the Consolidated Reply to
the Comments filed by the petitioners, this Court gave due course to the petition and required the
parties to submit their respective memoranda-Petitioners filed their Memorandum on 8 February
1989 33 while private respondent filed her Memorandum on 14 November
1990. 34

The kernel issue presented in this case is whether or not the trial court committed grave abuse of
discretion in denying the motion to dismiss based on the following grounds: (a) the complaint in
Civil Case No. 224-87 is in effect a suit against the public petitioner, a foreign sovereign immune
from suit which has not given consent to such suit and (b) Bradford is immune from suit for acts
done by her in the performance of her official functions as manager of the U.S. Navy Exchange of
JUSMAG pursuant to the Philippines-United States Military Assistance Agreement of 1947 and
the Military Bases Agreement of 1947, as amended.
Aside from maintaining the affirmative view, the public petitioner and Bradford even go further by
asserting that even if the latter's act were ultra vires she would still be immune from suit for the
rule that public officers or employees may be sued in their personal capacity for ultra vires and
tortious acts is "domestic law" and not applicable in International Law. It is claimed that the
application of the immunity doctrine does not turn upon the lawlessness of the act or omission
attributable to the foreign national for if this were the case, the concept of immunity would be
meaningless as inquiry into the lawlessness or illegality of the act or omission would first have to
be made before considering the question of immunity; in other words, immunity will lie only if
such act or omission is found to be lawful.
On the other hand, Montoya submits that Bradford is not covered by the protective mantle of the
doctrine of sovereign immunity from suit as the latter is a mere civilian employee of JUSMAG
performing non-governmental and proprietary functions. And even assuming arguendo that
Bradford is performing governmental functions, she would still remain outside the coverage of the
doctrine of state immunity since the act complained of is ultra vires or outside the scope of her
authority. What is being questioned is not the fact of search alone, but also the manner in which
the same was conducted as well as the fact of discrimination against Filipino employees.
Bradford's authority to order a search, it is asserted, should have been exercised with restraint and
should have been in accordance with the guidelines and procedures laid down by the cited
"NAVRESALEACT, Subic Inst." Moreover, ultra vires acts of a public officer or employee,
especially tortious and criminal acts, are his private acts and may not be considered as acts of the
State. Such officer or employee alone is answerable for any liability arising therefrom and may
thus be proceeded against in his personal capacity.
Montoya further argues that both the acts and person of Bradford are not exempt from the
Philippine courts' jurisdiction because (a) the search was conducted in a parking lot at Scout
Borromeo, Quezon City, outside the JUSMAG store and, therefore, outside the territorial control
of the U.S. Military Bases in the Philippines; (b) Bradford does not possess diplomatic immunity
under Article 16(b) of the 1953 Military Assistance Agreement creating the JUSMAG which
provides that only the Chief of the Military Advisory Group and not more than six (6) other senior
members thereof designated by him will be accorded diplomatic immunity; 35 and (c) the acts
complained of do not fall under those offenses where the U.S. has been given the right to exercise
its jurisdiction (per Article 13 of the 1947 Military Bases Agreement, as amended by the, MendezBlair Notes of 10 August 1965). 36
Finally, Montoya maintains that at the very least, Philippine courts may inquire into the factual
circumstances of the case to determine whether petitioner Bradford is immune from suit or exempt
from Philippine jurisdiction. To rule otherwise would render the Philippine courts powerless as
they may be easily divested of their jurisdiction upon the mere invocation of this principle of
immunity from suit.
A careful review of the records of this case and a judicious scrutiny of the arguments of both
parties yield nothing but the weakness of the petitioners' stand. While this can be easily
demonstrated, We shall first consider some procedural matters.
Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No. 224-87,
it nevertheless joined Bradford in the motion to dismiss on the theory that the suit was in effect
against it without, however, first having obtained leave of court to intervene therein. This was a
procedural lapse, if not a downright improper legal tack. Since it was not impleaded as an original
party, the public petitioner could, on its own volition, join in the case only by intervening therein;
such intervention, the grant of which is discretionary upon the court, 37 may be allowed only upon
a prior motion for leave with notice to all the parties in the action. Of course, Montoya could have

also impleaded the public petitioner as an additional defendant by amending the complaint if she
so believed that the latter is an indispensible or necessary party.
Since the trial court entertained the motion to dismiss and the subsequent pleadings filed by the
public petitioner and Bradford, it may be deemed to have allowed the public petitioner to
intervene. Corollarily, because of its voluntary appearance, the public petitioner must be deemed
to have submitted itself to the jurisdiction of the trial court.
Moreover, the said motion does not specify any of the grounds for a motion to dismiss enumerated
in Section 1, Rule 16 of the Rules of Court. It merely recites state immunity on the part of the
public petitioner and immunity on the part of Bradford for the reason that the act imputed to her
was done in the performance of her official functions. The upshot of this contention is actually
lack of cause of action a specific ground for dismissal under the aforesaid Rule because
assuming arguendo that Montoya's rights had been violated by the public petitioner and Bradford,
resulting in damage or injury to the former, both would not be liable therefor, and no action may
be maintained thereon, because of the principle of state immunity.
The test of the sufficiency of the facts to constitute a cause of action is whether or not, admitting
the facts alleged in the complaint, the court could render a valid judgment upon the same, in
accordance with the prayer in the complaint. 38
A motion to dismiss on the ground of failure to state a cause of action hypothetically admits the
truth of the allegations in the complaint.
In deciding a motion to dismiss, a court may grant, deny, allow amendments to the pleadings or
defer the hearing and determination of the same if the ground alleged does not appear to be
indubitable. 39 In the instant case, while the trial court concluded that "the grounds and arguments
interposed for the dismissal" are not "indubitable," it denied the motion for lack of merit. What the
trial court should have done was to defer there solution on the motion instead of denying it for
lack of merit.
In any event, whatever may or should have been done, the public petitioner and Bradford were not
expected to accept the verdict, making their recourse to this Court via the instant petition
inevitable. Thus, whether the trial court should have deferred resolution on or denied outright the
motion to dismiss for lack of merit is no longer pertinent or relevant.
The complaint in Civil Case No. 224-87 is for damages arising from what Montoya describes as
an "illegal search" on her "person and belongings" conducted outside the JUSMAG premises in
front of many people and upon the orders of Bradford, who has the propensity for laying suspicion
on Filipinos for theft or shoplifting. It is averred that the said search was directed only against
Howsoever viewed, it is beyond doubt that Montoya's cause of action is premised on the theory
that the acts complained of were committed by Bradford not only outside the scope of her
authority or more specifically, in her private capacity but also outside the territory where she
exercises such authority, that is, outside the NEX-JUSMAG particularly, at the parking area
which has not been shown to form part of the facility of which she was the manager. By their
motion to dismiss, public petitioner and Bradford are deemed to have hypothetically admitted the
truth of the allegation in the complaint which support this theory.
The doctrine of state immunity and the exceptions thereto are summarized in Shauf vs. Court of
Appeals, 40 thus:
I. The rule that a state may not be sued without its consent, now expressed in Article XVI Section
3, of the 1987 Constitution, is one of the generally accepted principles of international law that we
have adopted as part of the law of our land under Article II, Section 2. This latter provision merely
reiterates a policy earlier embodied in the 1935 and 1973 Constitutions and also intended to
manifest our resolve to abide by the rules of the international community. 41
While the doctrine appears to prohibit only suits against the state without its consent, it is also
applicable to complaints filed against officials of the state for acts allegedly performed by them in
the discharge of their duties. The rule is that if the judgment against such officials will require the
state itself to perform an affirmative act to satisfy the same, such as the appropriation of the
amount needed to pay the damages awarded against them, the suit must be regarded as against the

state itself although it has not been formally impleaded. 42 It must be noted, however, that the rule
is not so all-encompassing as to be applicable under all circumstances.
It is a different matter where the public official is made to account in his capacity as such for acts
contrary to law and injurious to the rights of plaintiff. As was clearly set forth by Justice Zaldivar
in Director of the Bureau of Telecommunications, et al. vs. Aligaen, etc., et al. 43 "Inasmuch as the
State authorizes only legal acts by its officers, unauthorized acts of government officials or
officers are not acts of the State, and an action against the officials or officers by one whose rights
have been invaded or violated by such acts, for the protection of his rights, is not a suit against the
State within the rule of immunity of the State from suit. In the same tenor, it has been said that an
action at law or suit in equity against a State officer or the director of a State department on the
ground that, while claiming to act or the State, he violates or invades the personal and property
rights of the plaintiff, under an unconstitutional act or under an assumption of authority which he
does not have, is not a suit against the State within
the constitutional provision that the State may not be sued without its consent." 44 The rationale for
this ruling is that the doctrinaire of state immunity cannot be used as an instrument for
perpetrating an injustice. 45
In the case of Baer, etc. vs. Tizon, etc., et al., 46 it was ruled that:
There should be no misinterpretation of the scope of the decision reached by this Court. Petitioner,
as the Commander of the United States Naval Base in Olongapo, does not possess diplomatic
immunity. He may therefore be proceeded against in his personal capacity, or when the action
taken by him cannot be imputed to the government which he represents.
Also, in Animos, et al. vs. Philippine Veterans Affairs Office, et al., 47 we held that:
. . . it is equally well-settled that where a litigation may have adverse consequences on the public
treasury, whether in the disbursements of funds or loss of property, the public official proceeded
against not being liable in his personal capacity, then the doctrine of non-suability may
appropriately be invoked. It has no application, however, where the suit against such a functionary
had to be instituted because of his failure to comply with the duty imposed by statute
appropriating public funds for the benefit of plaintiff or petitioner. . . . .
The aforecited authorities are clear on the matter. They state that the doctrine of immunity from
suit will not apply and may not be invoked where the public official is being sued in his private
and personal capacity as an ordinary citizen. The cloak of protection afforded the officers and
agents of the government is removed the moment they are sued in their individual capacity. This
situation usually arises where the public official acts without authority or in excess of the powers
vested in him. It is a well-settled principle of law that a public official may be liable in his
personal private capacity for whatever damage he may have caused by his act done
with malice and in bad faith, or beyond the scope of his authority or jurisdiction. 48
The agents and officials of the United States armed forces stationed in Clark Air Base are no
exception to this rule. In the case of United States of America, et al. vs. Guinto, etc., et al., ante, 49
we declared:
It bears stressing at this point that the above observations do not confer on the United States of
America Blanket immunity for all acts done by it or its agents in the Philippines. Neither may the
other petitioners claim that they are also insulated from suit in this country merely because they
have acted as agents of the United States in the discharge of their official functions.
Since it is apparent from the complaint that Bradford was sued in her private or personal capacity
for acts allegedly done beyond the scope and even beyond her place of official functions, said
complaint is not then vulnerable to a motion to dismiss based on the grounds relied upon by the
petitioners because as a consequence of the hypothetical admission of the truth of the allegations
therein, the case falls within the exception to the doctrine of state immunity.
In the recent cases of Williams vs. Rarang 50 and Minucher vs. Court of Appeals, 51 this Court
reiterated this exception. In the former, this Court observed:
There is no question, therefore, that the two (2) petitioners actively participated in screening the
features and articles in the POD as part of their official functions. Under the rule that U.S. officials
in the performance of their official functions are immune from suit, then it should follow that
petitioners may not be held liable for the questioned publication.

It is to be noted, however, that the petitioners were sued in their personal capacities for their
alleged tortious acts in publishing a libelous article.
The question, therefore, arises are American naval officers who commit a crime or tortious act
while discharging official functions still covered by the principle of state immunity from suit?
Pursuing the question further, does the grant of rights, power, and authority to the United States
under the RP-US Bases Treaty cover immunity of its officers from crimes and torts? Our answer is
In the latter, even on the claim of diplomatic immunity which Bradford does not in fact pretend
to have in the instant case as she is not among those granted diplomatic immunity under Article
16(b) of the 1953 Military Assistance Agreement creating the JUSMAG 52 this Court ruled:
Even Article 31 of the Vienna Convention on Diplomatic Relations admits of exceptions. It reads:
1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State.
He shall also enjoy immunity from its civil and administrative jurisdiction except in the case of:
xxx xxx xxx
(c) an action relating to any professional or commercial activity exercised by the diplomatic agent
in the receiving State outside his official functions (Emphasis supplied).
There can be no doubt that on the basis of the allegations in the complaint, Montoya has a
sufficient and viable cause of action. Bradford's purported non-suability on the ground of state
immunity is then a defense which may be pleaded in the answer and proven at the trial.
Since Bradford did not file her Answer within the reglementary period, the trial court correctly
declared her in default upon motion of the private respondent. The judgment then rendered against
her on 10 September 1987 after the ex parte reception of the evidence for the private respondent
and before this Court issued the Temporary Restraining Order on 7 December 1987 cannot be
impugned. The filing of the instant petition and the knowledge thereof by the trial court did not
prevent the latter from proceeding with Civil Case No.
224-87. "It is elementary that the mere pendency of a special civil action for certiorari,
commenced in relation to a case pending before a lower Court, does not interrupt the course of the
latter when there is no writ of injunction restraining it." 53
WHEREFORE, the instant petition is DENIED for lack of merit. The Temporary Restraining
Order of 7 December 1987 is hereby LIFTED.
Costs against petitioner Bradford.


MARCH 28, 2013
THE HOLY SEE vs. THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial
Court of Makati, Branch 61 and STARBRIGHT SALES ENTERPRISES, INC.
G.R. No. 101949 December 1, 1994
FACTS: Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is
represented in the Philippines by the Papal Nuncio; Private respondent, Starbright Sales Enterprises, Inc., is a
domestic corporation engaged in the real estate business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters located in the

Municipality of Paranaque registered in the name of petitioner. Said lot was contiguous with two other lots
registered in the name of the Philippine Realty Corporation (PRC).
The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers. Later,
Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of the
parties has the responsibility of evicting and clearing the land of squatters. Complicating the relations of the parties
was the sale by petitioner of Lot 5-A to Tropicana Properties and Development Corporation (Tropicana).
private respondent filed a complaint with the Regional Trial Court, Branch 61, Makati, Metro Manila for annulment
of the sale of the three parcels of land, and specific performance and damages against petitioner, represented by the
Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr., the PRC and Tropicana
petitioner and Msgr. Cirilos separately moved to dismiss the complaint petitioner for lack of jurisdiction based on
sovereign immunity from suit, and Msgr. Cirilos for being an improper party. An opposition to the motion was filed
by private respondent.
the trial court issued an order denying, among others, petitioners motion to dismiss after finding that petitioner
shed off [its] sovereign immunity by entering into the business contract in question Petitioner forthwith elevated
the matter to us. In its petition, petitioner invokes the privilege of sovereign immunity only on its own behalf and on
behalf of its official representative, the Papal Nuncio.
Whether the Holy See is immune from suit insofar as its business relations regarding selling a lot to a private entity
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through
its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957
(Rollo, p. 87). This appears to be the universal practice in international relations.
There are two conflicting concepts of sovereign immunity, each widely held and firmly established. According to the
classical or absolute theory, a sovereign cannot, without its consent, be made a respondent in the courts of another
sovereign. According to the newer or restrictive theory, the immunity of the sovereign is recognized only with regard
to public acts or acts jure imperii of a state, but not with regard to private acts or acts jure gestionis
If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii, especially when it
is not undertaken for gain or profit.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of a real estate business, surely the

said transaction can be categorized as an act jure gestionis. However, petitioner has denied that the acquisition and
subsequent disposal of Lot 5-A were made for profit but claimed that it acquired said property for the site of its
mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The donation was made not for
commercial purpose, but for the use of petitioner to construct thereon the official place of residence of the Papal
Nuncio. The right of a foreign sovereign to acquire property, real or personal, in a receiving state, necessary for the
creation and maintenance of its diplomatic mission, is recognized in the 1961 Vienna Convention on Diplomatic
Relations (Arts. 20-22). This treaty was concurred in by the Philippine Senate and entered into force in the
Philippines on November 15, 1965.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a governmental
character. Petitioner did not sell Lot 5-A for profit or gain. It merely wanted to dispose off the same because the
squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact
that squatters have occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has
been admitted by private respondent in its complaint
Private respondent is not left without any legal remedy for the redress of its grievances. Under both Public
International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign sovereign can ask
his own government to espouse his cause through diplomatic channels.
Private respondent can ask the Philippine government, through the Foreign Office, to espouse its claims against the
Holy See. Its first task is to persuade the Philippine government to take up with the Holy See the validity of its
claims. Of course, the Foreign Office shall first make a determination of the impact of its espousal on the relations
between the Philippine government and the Holy See (Young, Remedies of Private Claimants Against Foreign
States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964]). Once the
Philippine government decides to espouse the claim, the latter ceases to be a private cause.
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183 against
petitioner is DISMISSED.

[G.R. No. 154705. June 26, 2003]


COUNSELLOR AZHARI KASIM, petitioners, vs. JAMES VINZON, doing business under the
name and style of VINZON TRADE AND SERVICES, respondent.
This is a petition for review on certiorari to set aside the Decision of the Court of Appeals dated May
30, 2002 and its Resolution dated August 16, 2002, in CA-G.R. SP No. 66894 entitled The Republic of
Indonesia, His Excellency Ambassador Soeratmin and Minister Counselor Azhari Kasim v. Hon. Cesar
Santamaria, Presiding Judge, RTC Branch 145, Makati City, and James Vinzon, doing business under
the name and style of Vinzon Trade and Services.
Petitioner, Republic of Indonesia, represented by its Counsellor, Siti Partinah, entered into a
Maintenance Agreement in August 1995 with respondent James Vinzon, sole proprietor of Vinzon Trade
and Services. The Maintenance Agreement stated that respondent shall, for a consideration, maintain
specified equipment at the Embassy Main Building, Embassy Annex Building and the Wisma Duta, the
official residence of petitioner Ambassador Soeratmin. The equipment covered by the Maintenance
Agreement are air conditioning units, generator sets, electrical facilities, water heaters, and water motor
pumps. It is likewise stated therein that the agreement shall be effective for a period of four years and will
renew itself automatically unless cancelled by either party by giving thirty days prior written notice from
the date of expiry.1[1]
Petitioners claim that sometime prior to the date of expiration of the said agreement, or before
August 1999, they informed respondent that the renewal of the agreement shall be at the discretion of the
incoming Chief of Administration, Minister Counsellor Azhari Kasim, who was expected to arrive in
February 2000. When Minister Counsellor Kasim assumed the position of Chief of Administration in
March 2000, he allegedly found respondents work and services unsatisfactory and not in compliance with
the standards set in the Maintenance Agreement. Hence, the Indonesian Embassy terminated the
agreement in a letter dated August 31, 2000. 2[2] Petitioners claim, moreover, that they had earlier verbally
informed respondent of their decision to terminate the agreement.
On the other hand, respondent claims that the aforesaid termination was arbitrary and unlawful.
Respondent cites various circumstances which purportedly negated petitioners alleged dissatisfaction
over respondents services: (a) in July 2000, Minister Counsellor Kasim still requested respondent to
assign to the embassy an additional full-time worker to assist one of his other workers; (b) in August 2000,
Minister Counsellor Kasim asked respondent to donate a prize, which the latter did, on the occasion of the
Indonesian Independence Day golf tournament; and (c) in a letter dated August 22, 2000, petitioner
Ambassador Soeratmin thanked respondent for sponsoring a prize and expressed his hope that the
cordial relations happily existing between them will continue to prosper and be strengthened in the
coming years.
Hence, on December 15, 2000, respondent filed a complaint 3[3] against petitioners docketed as Civil
Case No. 18203 in the Regional Trial Court (RTC) of Makati, Branch 145. On February 20, 2001,
petitioners filed a Motion to Dismiss, alleging that the Republic of Indonesia, as a foreign sovereign State,
has sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines. The said
motion further alleged that Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents
as defined under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic


immunity.4[4] In turn, respondent filed on March 20, 2001, an Opposition to the said motion alleging that
the Republic of Indonesia has expressly waived its immunity from suit. He based this claim upon the
following provision in the Maintenance Agreement:
Any legal action arising out of this Maintenance Agreement shall be settled according to
the laws of the Philippines and by the proper court of Makati City, Philippines.
Respondents Opposition likewise alleged that Ambassador Soeratmin and Minister Counsellor Kasim can
be sued and held liable in their private capacities for tortious acts done with malice and bad faith. 5[5]
On May 17, 2001, the trial court denied herein petitioners Motion to Dismiss. It likewise denied the
Motion for Reconsideration subsequently filed.
The trial courts denial of the Motion to Dismiss was brought up to the Court of Appeals by herein
petitioners in a petition for certiorari and prohibition. Said petition, docketed as CA-G.R. SP No. 66894,
alleged that the trial court gravely abused its discretion in ruling that the Republic of Indonesia gave its
consent to be sued and voluntarily submitted itself to the laws and jurisdiction of Philippine courts and that
petitioners Ambassador Soeratmin and Minister Counsellor Kasim waived their immunity from suit.
On May 30, 2002, the Court of Appeals rendered its assailed decision denying the petition for lack of
merit.6[6] On August 16, 2002, it denied herein petitioners motion for reconsideration. 7[7]
Hence, this petition.
In the case at bar, petitioners raise the sole issue of whether or not the Court of Appeals erred in
sustaining the trial courts decision that petitioners have waived their immunity from suit by using as its
basis the abovementioned provision in the Maintenance Agreement.
The petition is impressed with merit.
International law is founded largely upon the principles of reciprocity, comity, independence, and
equality of States which were adopted as part of the law of our land under Article II, Section 2 of the 1987
Constitution.8[8] The rule that a State may not be sued without its consent is a necessary consequence of
the principles of independence and equality of States. 9[9] As enunciated in Sanders v. Veridiano II,10[10] the
practical justification for the doctrine of sovereign immunity is that there can be no legal right against the
authority that makes the law on which the right depends. In the case of foreign States, the rule is derived
from the principle of the sovereign equality of States, as expressed in the maxim par in parem non habet
imperium. All states are sovereign equals and cannot assert jurisdiction over one another. 11[11] A contrary


attitude would unduly vex the peace of nations. 12[12]

The rules of International Law, however, are neither unyielding nor impervious to change. The
increasing need of sovereign States to enter into purely commercial activities remotely connected with the
discharge of their governmental functions brought about a new concept of sovereign immunity. This
concept, the restrictive theory, holds that the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii, but not with regard to private acts or acts jure gestionis.13[13]
In United States v. Ruiz,14[14] for instance, we held that the conduct of public bidding for the repair of a
wharf at a United States Naval Station is an act jure imperii. On the other hand, we considered as an act
jure gestionis the hiring of a cook in the recreation center catering to American servicemen and the
general public at the John Hay Air Station in Baguio City,15[15] as well as the bidding for the operation of
barber shops in Clark Air Base in Angeles City.16[16]
Apropos the present case, the mere entering into a contract by a foreign State with a private party
cannot be construed as the ultimate test of whether or not it is an act jure imperii or jure gestionis. Such
act is only the start of the inquiry. Is the foreign State engaged in the regular conduct of a business? If
the foreign State is not engaged regularly in a business or commercial activity, and in this case it has not
been shown to be so engaged, the particular act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii.17[17]
Hence, the existence alone of a paragraph in a contract stating that any legal action arising out of the
agreement shall be settled according to the laws of the Philippines and by a specified court of the
Philippines is not necessarily a waiver of sovereign immunity from suit. The aforesaid provision contains
language not necessarily inconsistent with sovereign immunity. On the other hand, such provision may
also be meant to apply where the sovereign party elects to sue in the local courts, or otherwise waives its
immunity by any subsequent act. The applicability of Philippine laws must be deemed to include
Philippine laws in its totality, including the principle recognizing sovereign immunity. Hence, the proper
court may have no proper action, by way of settling the case, except to dismiss it.
Submission by a foreign state to local jurisdiction must be clear and unequivocal. It must be given
explicitly or by necessary implication. We find no such waiver in this case.
Respondent concedes that the establishment of a diplomatic mission is a sovereign function. On the
other hand, he argues that the actual physical maintenance of the premises of the diplomatic mission,
such as the upkeep of its furnishings and equipment, is no longer a sovereign function of the State. 18[18]
We disagree. There is no dispute that the establishment of a diplomatic mission is an act jure


imperii. A sovereign State does not merely establish a diplomatic mission and leave it at that; the
establishment of a diplomatic mission encompasses its maintenance and upkeep. Hence, the State may
enter into contracts with private entities to maintain the premises, furnishings and equipment of the
embassy and the living quarters of its agents and officials. It is therefore clear that petitioner Republic of
Indonesia was acting in pursuit of a sovereign activity when it entered into a contract with respondent for
the upkeep or maintenance of the air conditioning units, generator sets, electrical facilities, water heaters,
and water motor pumps of the Indonesian Embassy and the official residence of the Indonesian
The Solicitor General, in his Comment, submits the view that, the Maintenance Agreement was
entered into by the Republic of Indonesia in the discharge of its governmental functions. In such a case,
it cannot be deemed to have waived its immunity from suit. As to the paragraph in the agreement relied
upon by respondent, the Solicitor General states that it was not a waiver of their immunity from suit but a
mere stipulation that in the event they do waive their immunity, Philippine laws shall govern the resolution
of any legal action arising out of the agreement and the proper court in Makati City shall be the agreed
venue thereof.19[19]
On the matter of whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim
may be sued herein in their private capacities, Article 31 of the Vienna Convention on Diplomatic
Relations provides:
1. A diplomatic agent shall enjoy immunity from the criminal jurisidiction of the receiving
State. He shall also enjoy immunity from its civil and administrative jurisdiction, except in the
case of:
(a) a real action relating to private immovable property situated in the territory of
the receiving State, unless he holds it on behalf of the sending State for the purposes
of the mission;
(b) an action relating to succession in which the diplomatic agent is involved as
executor, administrator, heir or legatee as a private person and not on behalf of the
sending State;
(c) an action relating to any professional or commercial activity exercised by the
diplomatic agent in the receiving State outside his official functions.
The act of petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating the
Maintenance Agreement is not covered by the exceptions provided in the abovementioned provision.
The Solicitor General believes that said act may fall under subparagraph (c) thereof, 20[20] but said
provision clearly applies only to a situation where the diplomatic agent engages in any professional or
commercial activity outside official functions, which is not the case herein.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of
Appeals in CA G.R. SP No. 66894 are REVERSED and SET ASIDE and the complaint in Civil Case No.
18203 against petitioners is DISMISSED.
No costs.


Barcelona Traction, Light and Power Company

Belgium vs Spain
Barcelona Traction, Light and Power Company (BTLP) was a Canadian utility company that operated light and
power utilities in Spain. It was incorporated on September 12, 1911 in Toronto, Canada by Frederick Stark Pearson.
The company was developed by Belgian-American engineer Dannie Heineman.
It operated in Spain but was owned mostly by the Belgian holding companies SOFINA and SIDRO and became the
subject of the important International Court of Justice case, Belgium v. Spain (1970).
Juan March was a Spaniard from Mallorca in the Baleric Islands who had begun his career as a smuggler and had
become an industrialist and banker. March was widely known for involvement in lucrative illegal activities, for
bribery and political influence, and for bending the law whenever he saw a benefit. This was exemplified in his 1948
takeover of the Barcelona Traction, Light, and Power Company (BTLP) for a small fraction of its real worth.
BTLP was a utility company which provided power and streetcar services in Barcelona; originally incorporated in
Canada, it was mostly owned by Belgian investors. BTLP had come through the Spanish Civil War largely
undamaged, and was quite profitable. Its assets were about 10,000,000 (about $500,000,000 in 2010). However, for
the convenience of some of its foreign investors, BTLP had issued some bonds denominated in pounds, and the
interest on these bonds was payable in pounds. The Spanish government had imposed currency restrictions: BTLP
was unable to exchange its Spanish pesetas for pounds, and so could not pay the interest.
This was not viewed with any great alarm by the bond-holders; BTLP had plenty of pesetas and would pay the
interest arrears whenever the currency restrictions were relaxed.
However, March scented an opportunity. Agents secretly acting for him quietly bought up the bonds (about
500,000). Then in February 1948, they appeared in a Spanish court, asserted that BTLP was in default on the
bonds, and demanded immediate relief. The judge agreed and awarded ownership of all BTLP's assets to them (in
fact to March). BTLP's foreign investors appealed, but got no relief from Spanish courts. The Belgian government
appealed to the International Court of Justice but to no avail: the final resolution coming in 1970, eight years after
March's death.
Main article: Case Concerning Barcelona Traction, Light, and Power Company, Ltd
The government of Spain under Franco in the 1960s placed restrictions on foreigners doing business in Spain. The
Belgian stockholders in Barcelona Traction lost money and wanted to sue in the International Court of Justice, but in
the court Judge Fornier ruled on the side of Spain, holding that only the state in which the corporation was
incorporated (Canada) can sue. The decision in Belgium v. Spain is important in public international law because it
demonstrates the importance of protections of corporate nationality in nominal ("paper") terms over effective
nationality (sige social) where the ownership effectively resides. Unless a principle of law permits a country to
espouse a national's claim in the ICJ, there cannot be an espousal.

The case is also important as it demonstrates how the concept of diplomatic protection under international law can
apply equally to corporations as to individuals. It also expanded the notion of obligations owed erga omnes (in
relation to everyone) in the international community.

Corfu Channel incident

The Corfu Channel Incident consists of three separate events involving Royal Navy ships in the Channel of Corfu
which took place in 1946, and it is considered an early episode of the Cold War.[1][2][3][4] During the first incident,
Royal Navy ships came under fire from Albanian fortifications.[2] The second incident involved Royal Navy ships
striking mines and the third incident occurred when the Royal Navy conducted mine-clearing operations in the
Corfu Channel, but in Albanian territorial waters,[1] and Albania complained about them to the United Nations.[2]
This series of incidents led to the Corfu Channel case, where the United Kingdom brought a case against the
People's Republic of Albania to the International Court of Justice.[5] The Court rendered a decision under which
Albania was to pay 844,000 to the United Kingdom.[4][6] This is equivalent to 26 million in present-day terms.[7]
Because of the incidents, Britain, in 1946, broke off talks with Albania aimed at establishing diplomatic relations
between the two countries. Diplomatic relations were only restored in 1991.[8]
HMS Orion was one of the ships fired on in the first incident
The incidents started on 15 May 1946 when two Royal Navy ships, HMS Orion and HMS Superb, crossed the Corfu
Channel following a prior inspection and clearing of the strait.[2][9] While crossing they came under fire from
fortifications situated on the Albanian coast.[2][3] Although the ships suffered no material damage and no human
casualties occurred, Britain issued a formal demand for "an immediate and public apology from the Albanian
Government".[2] Such apology was not forthcoming, however, and the Albanian Government claimed that the British
ships had trespassed in Albanian territorial waters.[2][10]
The second incident was by far the more serious.[2] On 22 October 1946, a Royal Navy flotilla composed of the
cruisers HMS Mauritius and HMS Leander, and the destroyers HMS Saumarez and HMS Volage, was ordered
northward through the Corfu Channel with the express orders to test the Albanian reaction to their right of innocent
passage.[1][9][11] The crews were instructed to respond if attacked.[1]
They were passing close to the Albanian coast in what they considered to be a mine-free zone with Mauritius
leading and Saumarez following closely. Leander was about one and two-thirds of a nautical mile or three
kilometres away accompanied by Volage.[1] Near the bay of Saranda, just prior to 3 p.m., the destroyer Saumarez
struck a mine and was heavily damaged.[1][2][12] The destroyer Volage was ordered to tow the Saumarez south to Corfu

At approximately 4:16 p.m., while towing, Volage struck a mine also and sustained heavy damage.[1][2] Both ships'
bows were completely blown off and adverse weather conditions in the straits made the towing effort exceedingly
difficult with both ships sailing stern-first,[3][13] but after twelve hours of effort both ships managed to reach the Corfu
harbour.[1] Forty-four men died and forty-two were injured in the incident.[1][2]
Between thirty-two and forty-three of the dead are estimated to have belonged to the crew of Saumarez.[3][12][14] The
Saumarez was damaged beyond repair while the damage to Volage was repairable.[2][9][15] The Albanian coastal

batteries did not fire during this incident and an Albanian Navy vessel approached the scene flying the Albanian flag
and a white flag.[2] Since Albania had no appropriate vessels at that time, the mines were probably laid by
Yugoslavian minelayers Mljet and Meljine on Albanian request, around 20 October 1946.[16][17]
The British Minister of Pensions at the time of the incident awarded full military pensions to the disabled and to the
widows of the dead.[18]
The third and final incident occurred on 12 November 13 November 1946 when the Royal Navy carried out an
additional mine sweeping operation in the Corfu channel, codenamed Operation Retail.[2][9][19] Under the direction of
the Allied Commander-in-Chief Mediterranean the mine-sweeping operation took place within Albanian territorial
waters, but without authorisation by the Albanian government, and had the additional purpose of using the mines as
corpora delicti to prove that the British were acting in self defence by attempting to clear hazards to navigation.[1][19]

There was also present a French naval officer who, at the invitation of the Mediterranean Zone Board, acted as an
observer. An aircraft carrier, HMS Ocean (Captain, later Admiral of the Fleet, Sir Casper John), cruisers and other
warships provided cover. Twenty-two contact mines were discovered and cut from their undersea moorings. The
placement of the mines was such that the minefield was deemed to have been deliberately designed and not simply a
random aggregation of isolated mines. Two of the cut mines were sent to Malta for further examination.[1]
It was then discovered that the mines were of German origin but they were free of rust and marine growth. They
were also freshly painted and their mooring cables were recently lubricated. It was concluded that the minefield was
laid shortly before the incident involving Saumarez and Volage. Mine fragment analysis from the Volage confirmed
the mines were similar to the ones at Malta.[1]
Following the third incident, Albania, under prime minister Enver Hoxha, dispatched a telegram to the United
Nations complaining about an incursion by the Royal Navy into Albanian coastal waters. [2][20]

On 9 December 1946 Britain sent a note to the Albanian government accusing Albania of laying the mines and
demanding reparations for the May and October incidents. Britain demanded a reply within fourteen days,
mentioning that in the event of a negative Albanian response the matter would be referred to the UN Security
Council. The Albanian government in its reply, which was received by the British on 21 December 1946, denied the
British allegations and went on to elaborate that the whole affair was the work of countries which did not wish to see
a normalisation of relations between Albania and Britain, and in fact vessels from Greece and other countries had
trespassed recently in the area where the mines were discovered.[1]
The British government did not find this response satisfactory and it eventually brought its case to the International
Court of Justice, having failed in its attempt to involve the Security Council in the matter.[1][2][21] It was the first case
adjudicated by the ICJ,[22] and in December 1949 the court awarded the British the sum of 843,947 or
US$2,009,437 having found that,[23] irrespectively of who laid the mines, the Albanians ought to have observed any
such action,[9] since the minefield was so close to their coast, and thus they failed to inform the British of the danger.
The Court also rejected the self-defence argument advanced by the United Kingdom and found that the
mine-clearing operations undertaken by the British during Operation Retail, in the absence of prior Albanian
consent, were illegal.[9][19]

The Albanian Government refused to pay the reparations ordered by the Court and in retaliation the British withheld
1574 kilograms of gold belonging to Albania.[1][2][8][21] The gold, looted by the Axis powers from Albania during
World War II, was stored in the vaults of the Bank of England and was awarded to the Albanians by the US-UKFrance tripartite commission in 1948 after it was retrieved by the Allies.[2]
With the end of the Cold War, the People's Socialist Republic of Albania ceased to exist in 1991.[1] Diplomatic
relations between the two countries were established on 29 May 1991.[8] Soon after, on 8 May 1992, Britain and
Albania announced that they had come to an agreement over the Corfu Channel case, jointly announcing that "Both
sides expressed their regret at the Corfu Channel Incident of 22 October 1946".[1][8] Only in 1996 following lengthy
negotiations was the gold finally returned to Albania after it agreed to pay US$2,000,000 in delayed reparations.[1][2]

Enver Hoxha, in his memoirs about his first meeting with Joseph Stalin, wrote that the whole affair was concocted
by the British as an excuse for military intervention at the town of Saranda.[26] Hoxha also described the events as
"an unprecedented provocation toward our country".[4]
On 2 November 2009 a team of US and Albanian researchers announced that they found what they believe to be the
bow segments of HMS Volage in the Corfu Channel under approximately fifty metres of water.[27] Dishes, shoes and
ammunition found in the area surrounding the wreckage are further evidence that fits, according to the researchers.
In May 2013, a special edition of Archaeology Magazine entitled "Shipwrecks", specifically, the article "Righting
a Cold War Wrong: Where was HMS Volage?" gave insight into the new discoveries. The Director of the Albanian
Center for Marine Research, Auron Tare obtained film footage from the The National Archives United Kingdom of
the incident showing HMS Volage very close to shore when the incident occurred. This was further reinforced by
James P. Delgado, Director of Maritime Heritage for the National Oceanic and Atmospheric Administration
(NOAA). He reasserted his claim made previously to Associated Press that the wreck was that of the HMS Volage
because the electrical wiring of the bow section discovered was of the time period one would expect. The fact that
the bow section, with dishes intact and stacked shows a rapid sinking, and negates the British claim that the ships,
including HMS Volage were not in international waters as claimed so many decades ago. (Archaeology Magazine,
"Shipwreck", May 2013)
International law
Main article: Corfu Channel case
The International Court of Justice ruling in the case established a precedent regarding whether a violation of
territorial sovereignty is justified intervention. The United Kingdom claimed it was justified in entering Albanian
territorial waters on 12 and 13 November 1946 to secure evidence needed to support its case. The ICJ responded,
"The Court cannot accept such a line of defence. The Court can only regard the alleged right of intervention
as the manifestation of a policy of force, such as has, in the past, given rise to most serious abuses and such
as cannot, whatever be the present defects in international organisation, find a place in international law.
Intervention is perhaps still less admissible in the particular form it would take here; for, from the nature of
things, it would be reserved for the most powerful States, and might easily lead to perverting the
administration of inter-national justice itself.
The United Kingdom Agent, in his speech in reply, has further classified "Operation Retail" among
methods of self-protection or self-help. The Court cannot accept this defence either. Between independent
States, respect for territorial sovereignty is an essential foundation of international relations. The Court

recognises that the Albanian Government's complete failure to carry out its duties after the explosions, and
the dilatory nature of its diplomatic notes, are extenuating circumstances for the action of the United
Kingdom Government. But to ensure respect for international law, of which it is the organ, the Court must
declare that the action of the British Navy constituted a violation of Albanian sovereignty." [28]


Judgment of 24 May 1980
In its Judgment in the case concerning Ul~itedS tates Diplomatic
and Consular Staff in Tehran, the Court decided (1)
that Iran has violated and is still violating albligations owed
by it to the United States; (2) that these viiolations engage
Iran's responsibility; (3) that the Govenuncznt of Iran must
immediately release the United States natiollals held as hostages
and place the premises of the em bass!^ in the hands of
the protecting power; (4) that no member of the United States
diplomatic or consular staff may be kept in1 Iran to be subjected
to any form of judicial proceedings or to participate in
them as a witness; (5) that Iran is under an obligation to make
reparation for the injury caused to the United States; and (6)
that the form and amount of such re pa ratio^^, failing agreement
between the parties, shall be settled by the Court. (The
full text of the operative paragraph is reproduced below.)
These decisions were adopted by large majorities: (1) and
(2)- 13 votes a 2; (3) and (4)-unanimousl:y; (5)- 12 votes
to 3; (6)- 14 votes to 1 (the votes are re4:orde.d by name
A separate opinion was appended to the Judgment by
Judge Lachs, who voted against operative paragraph 5. Dissenting
opinions were appended by Judge Morozov, who
voted against parag~aphs1 ,2,5 and 6, and by Judge Tarazi,
who voted against paragraphs 1,2 and 5.
Procedure before the Court
(paras. 1-10)
In its Judgment, the Court recalls that on 29 November
1979 the United States of America had instituted proceedings
against Iran in a case arising out of the situation at its
Embassy in Tehran and Consulates at Tabriz and Shiraz, and
the seizure and detention as hostages of its diplomatic and
consular staff in Tehran and two more citizens of the United
States. The United Eitates having at the same time requested
the indication of provisional measures, the Court, by a unanimous
Order of 15 Ebcember 1979, indicated, pending final
judgment, that the Embassy should immediately be given
back and the hostagc:~ released (see Press Communiqu6 No.
The procedure then continued in accordance with the Statute
and Rules of Court. The United States filed a Memorial,
and on 18, 19 and 3X) March 1980 the Court held a public
hearing at the close of which the United States, in its final
submissions, requested it to adjudge and declare, inter alia,
that the Iranian Government had violated its international
legd obligations to the United States and must: ensure the

immediate release of the hostages; afford the United States

diplomatic and consular personnel the protection and immunities
to which they -were entitled (including immunity from
Continued on next page
Summaries of Judgments, Advisory Opinions and Orders of the International Court of Justice
Not an official document
criminal jurisdiction) and provide them with facilities to
leave Iran; submit the penons respnsibbe for the crimes
committed to the competent Iranian authoriities for prosecution,
or extradite them to lhe United States; and pay the
United States reparation, in a sum to be subsequently determined
by the Court.
Iran took no part in the prtneedings. It neither filed pleadings
nor was represented at the hearing, anti no submissions
were therefore presented on its behalf. Its position was however
defined in two letters addressed to the Cow. by its Minister
for Foreign Affairs on !) December 19'79 an.d 16 March
1980 respectively. In these fte Minister maintained inter alia
that the Court could not and should not take cognizance of the
The Facts
(paras. 1 1-32)
The Court expresses regrc:t that Iran did not appear before
it to put forward its argumexits. The absenw, of Iran from the
proceedings brought into operation Article t53 of the Statute,
under which the Court is required, before finding in the
Applicant's favour, to satisfy itself that the allegations of fact
on which the claim is based <are well founded.
In that respect the Court observes that it has had available
to it, in the documents presented by the United States, a massive
body of information f i ~ mva rious sources, including
numerous official statements of both lrariian and United
States authorities. This information, the Court notes, is
wholly concordant as to the rnain facts and has all been communicated
to Iran without evoking any denial. l'he Court is
accordingly satisfied that tht: allegations of fact on which the
United States based its claim were weH founded.
(paras. 334l)
Under the settled jurisprutience of the Cow, it is bound, in
applying Article 53 of its Statute, to investigate, on its own
initiative, any preliminary question of admissibility or jurisdiction
that may arise.
On the subject of admissil>ility, the Court, aftel: examining
the considerations put forw;ard in the two betters from Iran,
finds that they do not disclost: any ground far concluding that
it could not or should not de:d with the case. Neither does it
find any incompatibility with the continuance of judicial proceedings
before the Court in the establishment by the
Secretary-General of the United Nations, with the agreement
of both States, of a Commission given a mandate to undertake
a fact-finding mission to Iran, hear Iran's grievances and
facilitate the solution of the crisis between the two countries.
(paras. 45-55)
Four instruments having teen cited by the United States as

bases for the Court's jurisdic:tion to deal wiith its claims, the
Court finds that three, nameily the Optional Protmols to the
two Vienna Conventions of 11961 and 1963 ton, respectively,
Diplomatic and Consular Relations, and the 1955 lfeaty of
Amity, Economic Relations, and Consular Rights between
the United States and Iran, do in fact provide such foundations.
The Court, however, doas not find it necessary in the
present Judgment to enter into the question whether Article
13 of the fourth instrument so cited, namely the 1973 Convention
on the Prevention and Punishment of Crimes against
Internationally Protected Persons including Diplomatic
Agents, provides a basis for the exercise of its jurisdiction
with n:spect to the United States' claims thereunder.
MERITS: Attributability to the Iranian State of the acts complained
of, and violation by Iran of certain obligations
(paras. 56-94)
The Court has also, under Article 53 of its Statute, to satisfy
itself that the claims of the Applicant are well founded in
law. To this end, it considers the acts complained of in order
to determine how far, legally, they may be attributed to the
Iranian State (as distinct from the occupiers of the Embassy)
and whether they are compatible or incompatible with Iran's
obligations under treaties in force or other applicable rules of
international law.
(a) The events of 4 November 1979
(paras. 5M8)
The first phase of the events underlying the Applicant's
claims covers the armed attack on the United States Embassy
carried out on 4 November 1979 by Muslim Student Followers
of the Imam's Policy (further referred to as "the militants"
in the Judgment), the overrunning of its premises, the
seizure of its inmates as hostages, the appropriation of its
property and archives, and the conduct of the Iranian authorities
in the face of these occurrences.
The Court pints out that the conduct of the militants on
that occasion could be directly attributed to the Iranian State
only if it were established that they were in fact acting on its
behalf. The information before the Court did not suffice to
establish this with due certainty. However, the Iranian
State--which, as the State to which the mission was accdited,
was under obligation to take appropriate steps to protect
the Uinited States Embassy-did nothing to prevent the
attack, stop it before it reached its completion or oblige the
militants to withdraw from the premises anti release the hostages.
This inaction was in contrast with the conduct of the
Iranian authorities on several similar occasions at the same
period, when they had taken appropriate steps. It constituted,
the Court finds, a clear and serious violation of Iran's obligations
to the United States under Articles 22 (2). 24,25,26,
27 am1 29 of the 1961 Vienna Convention on Diplomatic
Relations, of Articles 5 and 36 of the 1963 Vienna Convention
or~C onsular Relations, and of Article 111 (4) of the 1955
lfeaty. Further breaches of the 1963 Convention had been
involved in failure to protect the Consulates at Tabriz and
The Court is therefore led to conclude that on 4 November

1979 the Iranian authorities were fully aware of their obligations

under the conventions in force, and also of the urgent
need for action on their part, that they had the means at their
disposal to perform their obligations, but that they completely
failed to do so.
(b) Events since 4 November 1979
(paras. 69-79)
The second phase of the events underlying the United
States' claims comprises the whole series; of facts which
occmd following the occupation of the Embassy by the
militants. Though it was the duty of the Iranian Government
to take every appropriate step to end the infringement of the
inviolability of the Embassy premises and staff, and to offer
reparation for the damage, it did nothing of the kind. Instead,
expressions of approval were immediately heard from
numenous Iranian authorities. Ayatollah Khomeini himself
proclaimed the Iranian State's endorsement of both the seizure
of the premises and the detention of the hostages. He
descril~dth e Embassy as a "centre of espitwage", declared
that the hostages would (with some exceptions) remain
"under arrest" until the United States lhad returned the
former Shah and his property to Iran, and foshade all negotiation
with the United States on the subject. Once organs of the
Iranian State had thus given approval to the acts complained
of and decided to perpetuate them as a meams of pressure on
the United States, those acts were transform.ed into acts of the
Iranian State: the militants became agents of that State,
which itself became internationally responsible for their acts.
During the six months which ensued, the situation underwent
no material change: the Court's Order of 19 December 1979
was publicly rejected by Iran, while the Ayatollah declared
that the detention of the hostages would c:ontinue until the
new Iranian parliament had taken a decision as to their fate.
The Iranian authorities' decision to continue the subjection
of the Embassy to occupation, and of its staff to detention
as hostages, gave rise to repeated and multiple breaches
of Iran's treaty obligations, additional to those already committed
at the time of the seizure of the Emtbassy (1961 Convention:
Arts. 22,24,25,26,27 and 29; 1963 Convention:
inter alia, Art. 33; 1955 Tkaty, Art. iI (4)).
With regard to the Charge d'affaires aid the two other
members of the United States mission who have been in the
Iranian Ministry of Foreign Affairs since 4 November 1979,
the Court finds that the Iranian authoritie:~h ave withheld
from them the protection and facilities necessary to allow
them to leave the Ministry in safety. Accordingly, it appears
to the Court that in their respect there have been breaches of
Articles 26 and 29 of the 1961 Vienna Convention.
Taking note, furthermore, that various Iranian authorities
have threatened to have some of the hostages submitted to
trial before a court, or to compel them to Ixar witness, the
Court considers that, if put into effect, thal: intention would
constitute a breach of Article 31 of the same: Convention.
(c) tbssible existence of special circumstances
(paras. 80-89)
The Court considers that it should examine the question

whether the conduct of the Iranian Governmlent might be justified

by the existence of special circumstances, for the Iranian
Mister for Foreign Affairs had alleged in his two letters
to the Court that the United States had canied out
criminal activities in Iran. The Court considers that, even if
these alleged activities could be consideredl as proven, they
would not constitute a defence to the United States' claims,
since diplomatic law provides the possibility of breaking off
diplomatic relations, or of declaring persona non grata
members of diplomatic or consular missions who may be carrying
on illicit activities. The Court concludes that the Government
of Iran had recourse to coercion against the United
States Embassy and its staff instead of making use of the normal
means at its disposal.
(d) International responsibility
(paras. %92)
The Court finds that Iran, by committing successive and
continuing breaches of the obligations laid upon it by the
Vienna Conventions of 196 1 and 1963, the 1955 'Reaty, and
the applicable rules of general international law, has incurred
responsibility towards the United States. A$; a consequence,
there is an obligation on the part of the Iranian State to make
reparation for the injury caused to the Unitt:d States. Since,
however, the breaches are still continuinr:, the form and
is not any private individuals or p u p s that have set at naught
the inviolability of an embassy, but the very government of
the State to which the mission is accredited, the Court draws
the attention of the entire international community to the
imparable harm that may be caused by events of the kind
before the Court. Such events cannot fail to undermine a
carefully constructed edifice of law, the maintenance of
which is vital for the security and well-being of the international
(e) United States operation in Iran on 24-25 April 1980
(paras. 93 amd 94)
Wlth regard to the operation undertaken in Iran by United
States military units on 24-25 April 1980, the Court says that
it cannot fail to express its concern. It feels bound to observe
that an operation undertaken in those circumstances, from
whatever motive, is of a kind calculated to undermine respect
for the judicial pmxss in international relations. Nevertheless,
the question ofthe legality of that operation can have no
bearing on the evaluation of Iran's conduct on 4 November
1YJ9. The findings reached by the Court are therefore not
affected by that operation.
For these reasons, the Court gives the decision reproduced
in full below:
1. By thirteen votes' to two,2
Decides that the :Islamic Republic of Iran, by the conduct
which the Court has; set out in this Judgment, has violated in
several respects, and is still violating, obligations owed by it
to the United States of America under international conventions
in force between the two countries, as well as under
long-established rules of general international law;
2. By thirteen votes1 to two,2
Decides that the violations of these obligations engage the

responsibility of the Islamic Republic of Iran towards the

United States of Anierica under international law;
3. Unanimously,
Decides that the Government of the Islamic Republic of
Iran must immediately take all steps to redress the situation
resulting from the events of 4 November 1979 and what followed
from these events, and to that end:
(a) must immediately terminate the unlawful detention
of the United States Charg6 d'affaires and other diplomatic
and consular staff and other United States nationals now held
hostage in Iran, and must immediately release each and every
one and entrust thein to the protecting Power (Article 45 of
the 196 1 Vienna Convention on Diplomatic Relations);
(b) must ensure that all the said persons have the necessary
means of leaving Iranian territory, including means of
amount of such reparation cannot yet be deiirmined. *@omposed as follclws: President Sir Humphrey Waldock;
WceAt the same time the Court considers it essential to reiter- Resident Elias; Judges Pmter, Gros, Lachs, Morozov,
Nagendra Singh,
ate the observations it made in its Order 15 December Rude. Mosler, Tarazi, &la, Ago. El-Erian. Sette-Camara
and Baxter.
1979 on the importance of the principles of international law 'PresidentS ir ~umphreyW aldock; Wee-President
Elias; Judges Foster, Gros, Laths, Nagmdra !lingh, Ruda, Mosler, Oda, Ago, El-Erian,
governing diplomatic and consular relations,. After stressing h mand Baxter.
the particular gravity of the case, arising out of the fact that it 2~ulgoMs ommv and mi.
(c) must immediately place in the hands of the protecting
Pbwer the premises, property, archives and ~docuimentos f the
United States Embassy in Tehran and of its C!onsulates in Iran,
4. Unanimously,
Decides that no member of the United States diplomatic or
consular staff may be kept i11 Iran to be subjtxted to any form
of judicial proceedings or to1 participate in them as a witness;
5. By twelve votes3 to three:
Decides that the Governinnent of the Islamic Republic of
Iran is under an obligation to make reparation to the Govemment
of the United States of America for the: injury caused to
the latter by the events of 4 November 19'79 and what followed
from these events;
6. By fourteen votes5 to one:
Decides that the form andl amount of such reparation, failing
agreement between the Parties, shall be settled by the
Court, and reserves for this purpose the subseqluent procedure
in the case.
Judge Lachs indicated tha~ht e voted against the first part of
operative paragraph 5, as he found it redundlant. 'The responsibility
having been establisl~edt,h e whole question of reparations
should have been 1e:fi to the subsequent procedure,
including the question of forin and amount as provided by the
The opinion stresses the importance of the Judgment for
diplomatic law, and the major part of it is devoted to the
question of the practical sol~ltionb y diplomiatic nneans of the
dispute between the Ruties. Once the legal issues have been
clarified by the Judgment, the parties should lake speedy

action and make maximum c:fforts to dispel tension and mistrust,

and in this a third-party initiative may be important.
Judge Lachs visualizes a particular role for the SecretaryGeneral of the United Natioin~sin this respect and the work of
a special commission or mediating body. In .view of the gravity
of the situation, the need :for a resolution is urgent.
In his dissenting opinion.., Judge Morozov indicates that
operative paragraph 1 of tht: Judgment is tlrafted in such a
way that it is not limited to the question of the violation of the
Vienna Conventions of 1961 and 1963, but also covers, if
read with some para f"p hs d the reasoning, the question of alleged violations o the 1955 'Ikaty of Amity, Economic
Relations and Consular Rights between h n an d the United
States; this treaty, he believc:~, does not provide: the parties
with an unconditional right to invoke the c~ompulsoryju risdiction
of the Court, and in the circumstanc:es the Court has
in fact no competence to corlsider the alleged violations.
Mermore, Judge Morozov observes, the United States
committed during the period of the judicial deliberations
many unlawful actions, cul~iunatingin the tnilitruy invasion.
'President ~ i ~ ump h rWe yal dock; Vice-presidentH ias; Judges Forster,
Gros. Nagcndra Singh. Ruda, Moaler, Oda, Ago, El-Erian, Sene-Camara
Judges Lachs, M m v and Tauazi.
'President SiHumphrey Waldock; Vice-President Illias; Judges Fmter.
Groe. Lachs, Nagendra Singh, Ruda, Moslcr, Tarazi, 13da. Ago, ECErian,
Sette-Camara and Baxter.
6~udgMe orowv.
of the territory of the Islamic Republic of I m , and has therefore
lost the legal right to refer to the l b t y in its relations
with Iran.
Judge Morozov voted against operative paragraphs 2, 5
and 6 because he had noted that a series of actions was undertaken
by the United States of America against Iran in the
course of the judicial deliberations, in particular the freezing
by the United States of very considerable Iranian assets,
combined with the intention, clearly expressed in a statement
made Iby the President of the United States on 7 April 1980,
to make use of these assets, if need be, in accordance with
decisions that would be taken in the domestic framework of
the United States; that meant that the United States was acting
as a "judge" in its own cause. In Judge Morozov's view,
the situation, created by actions of the IJnited States, in
which the Court carried on its judicial deliberations in the
case had no precedent in the whole history of the administration
of international justice either before the Court or before
any other international judicial institution. The United
States, having caused severe damage to Iran, had lost the
legal as well as the moral right to reparations from Iran, as
mentioned in operative paragraphs 2,5 and 6.
Judge Morozov also finds that some paragraphs of the reasoning
part of the Judgment describe the circ:umstances of the
case in an incorrect or one-sided way.
He considers that, without any prejudice to the exclusive
compe:tence of the Security Council, the Court, from a purely
legal pint of view, could have drawn attention to the undeniable
fact that Article 5 1 of the United Nations Charter, establishing

the right of self-defence to which the United States of

America referred in connection with the events of 24-25
April, may be invoked only "if an armed attack occurs
against a member of the United Nations", and that there is no
evidence of any armed attack having occurred against the
United States.
Judge Morozov also stresses that some indication should
have been included in the Judgment to the effect that the
Court considered that settlement of the dispute between the
United States and the Islamic Republic of Iran should be
reached exclusively by peaceful means.
Judge Tarazi voted in favour of operative paragraphs 3 and
4 of the Judgment, because he considered that the seizure of
the embassy, and the detention as hostages of those present in
it, constituted an act in breach of the provi2iions of the 1961
and 1%3 Vienna Conventions on Diplomatic and Consular
On the other hand, Judge Tarazi felt impelled to vote
against operative paragraph 1, because he considered that
only the 1 % 1 and 1963 Vienna Conventions conferred jurisdiction
on the Court in the present case.
He tilso voted against paragraphs 2 and 5, because, in his
view, the Court, at the present stage of the proceedings and
considering the concomitant circumstances, could not make
any ruling as to the responsibility of the Government of the
Islamic Republic of Iran.
On the other hand, Judge Tarazi voted in favour of paragraph
6, because he considered that, in the event of any reparations
being owed, they should be determined and assessed
by the International Court of Justice; it was not admissible
for them to be the subject of proceedings in courts of domestic


Case Concerning the Factory at Chorzow (Indemnities)

Germany v. Poland



Perm. http://www.worldcourts.com/pcij/eng/decisions/1928.12.15_chorzow_ann
Link: ex_to_1929.05.25_chorzow.htm
Citation Factory at Chorzow (Germ. v. Pol.), 1928 P.C.I.J. (ser. A) No. 19, annex,
(Order of Dec. 15)
Publicat Publications of the Permanent Court of International Justice Series A ion:
No. 18/19 (Annex); Collection of Judgments A.W. Sijthoffs Publishing
Company, Leyden, 1929.

[p14] Annex
Order made on December 15, 1928

The President of the Permanent Court of International Justice,


Having regard to Articles 48 and 50 of the Statute of the Court;

Having regard to Judgment No. 13 given on September 13th, 1928, by
the Court in the case relating to the factory at Chorzw (indemnities);

Having regard to an Order of Court issued on September 13th, 1928,
ordering that an expert enquiry should be held;
Having regard to an Order by the President of the Court dated October
16th, 1928, nominating Messrs. Collett, Herzog and Hoey as experts for the
enquiry in question;
Having regard to an Order by the President of the Court dated
November 14th, 1928, fixing the time within which the Committee of Experts set
up under the Order of Court of September 13th, 1928, should file its report;
Whereas by a letter of December 6th, 1928, the Agent for the German
Government in the case in question informed the Registrar of the Court, with
reference to Article 61 of the Rules, that "the Parties to the Chorzw factory case
have concluded an agreement regarding the settlement of this dispute";
And whereas a communication in the same terms was made to the
Registrar by letter dated December 13th, 1928, from the Agent for the Polish
Government in the said case;
And whereas copies of the documents embodying the conditions of the
settlement on which the Parties are agreed - namely, an agreement concluded on
November 12th, 1928, between the Polish Government of the one part and the
Bayerische. Stickstoffwerke A.-G. and the Oberschlesische Stickstoffwerke A.G., represented by Professor Dr. Care, of the other part, as also the notes
exchanged on November 27th, 1928, between the Polish Minister for Foreign
Affairs and the German Minister to Warsaw - have been communicated to the
Court by the Agent for the German Government; and whereas the Agent for the
Polish Government has referred to the documents thus filed, documents copies of
which have been placed at his disposal
And whereas in accordance with the terms of the notes thus exchanged it has been
agreed between the Parties that "the Application now pending before the
Permanent Court of International Justice at The Hague in the Chorzw case shall
be withdrawn as having no further purpose"; and whereas, therefore, the
agreement concluded must be considered as settling the whole of the dispute
submitted to the Court on February 8th, 1927, by the German Government;
And whereas, since written notice of the agreement concluded between the Parties
was given to the Court before the close of the proceedings, it remains for the
Court under Article 61 of the Rules merely to record officially the conclusion of
the agreement;
And whereas, accordingly, the proceedings by the expert enquiry
ordered to be held under the terms of the judgment and Order of September 13th,

1928, have likewise ceased to fulfil any further purpose; and that consequently
these proceedings should be brought to an end;


The expert enquiry ordered to be held in the case concerning the factory at
Chorzw (indemnities), in conformity with the judgment and the Order given by
the Court on September 13th, 1928, is terminated.
The Expert Committee set up in the manner defined in the Orders given by
the President of the Court on October 16th and November 14th, 1928, is
Copy of the present Order shall be forwarded to the Members of the
Committee of Experts.
Done in French and English, the French text being authoritative, at the
Peace Palace, The Hague, this fifteenth day of December, one thousand nine
hundred and twenty-eight, in three copies, one of which is to be placed in the
archives of the Court, and the others to be forwarded to the Agents of the German
and Polish Governments respectively.
(Signed) D. ANZILOTTI,