occupation of Kuwait
Lady Hazel M.Fox, QC
INTRODUCTION
The Security Council, by its imposition of economic sanctions on Iraq and by the action of the coalition forces under its authorization in evicting Iraq from Kuwait, has provided a new and bold application of UN procedures in accordance with the UN Charter to achieve compliance with international law. The consensus of the five permanent members of the Security Council offers fresh opportunities for the United Nations to become the global peace-keeping organization originally envisaged in the Charter. In that process, opportunity also exists to establish principles of international law relating to compensation for war damage. The Security Council announced in Resolution 674 of 29 October 1990, and repeated in Resolution 687 on 2 April 1991, that ‘Iraq was liable under international law for any direct loss, damage or injury as a result of Iraq’s unlawful invasion and occupation of Kuwait.’ Acting on a report made by the Secretary-General of the United Nations dated 2 May, the Security Council, by Resolution 692 of 17 May 1991, established a Compensation Commission for the processing, determination and payment of claims and a fund into which Iraq is to contribute a determined proportion of the value of its oil exports and out of which the claims are to be paid. By Resolution 705 (1991) this proportion has been determined at 30 per cent.
On the face of it, then, it remains only for the UN Compensation Commission to apply international law and to make compensation to claimants who have suffered loss by reason of Iraq’s unlawful conduct. But major hurdles stand in the way of such a process:
the enormity and variety of the claims for damages caused by Iraq, the absence of clear rules of international law relating to settlement of war damage claims, Iraq’s obstruction and the combination of the role of judge and prosecutor in the task undertaken by the UN Compensation Commission.
It is proposed, first, to give a brief summary of the facts relating to the damage caused by Iraq, second, to examine the procedural and substantive requirements of international law relating to war damage claims, and third, by reason of the wide margin of choice which the application of these requirements allows, to indicate the conflicting roles which the Security Council may be called on to play. The discussion will in the main be limited to settlement of claims arising for damage suffered by the civilian population in breach of the 1949 Geneva Convention IV.
As to terminology, the term ‘reparation’ in the broad non-technical sense is used to describe all measures and procedures by which a state, which has violated an
international obligation in favour of another state, makes, or is made to make, good the damage it has caused to that state. In its narrow technical sense, it covers the three methods by which pecuniary or material and non-pecuniary or moral damage is made good—by restitution in kind, financial compensation and satisfaction.
THE ENORMITY AND VARIETY OF DAMAGE CAUSED BY IRAQ
The facts
By its invasion of Kuwait, Iraq caused damage to Kuwait and its nationals and also to third states and their nationals. At the request of Kuwait, a UN Mission, led by Mr Abdulrahmir A.Farah, visited Kuwait from 16 March to 4 April 1991 and submitted two reports to the UN Secretary-General on the damage caused by Iraq to Kuwait and its nationals. The mission reported that, before 2 April 1990, Kuwait was a society characterized by a highly capitalized urban infrastructure, with a population of 2.1 million, of whom about 800,000 were Kuwaiti citizens, and with a per capita income of about US$14,700. When it visited in March 1991 it found ‘a country where the electric power, telecommunications and transportation systems had been wrecked, government buildings and other public institutions heavily damaged and most official records and equipment either destroyed or looted.’ The firing of more than 600 oil wells ‘brought unprecedented catastrophe to the economy and environment of Kuwait’—a 70 per cent decrease in Kuwait’s gross domestic product (GDP) between early August 1990 and late February 1991, and pollution of the atmosphere and of the marine environment by the flow of crude oil into the Persian Gulf.1
Mr Farah’s report on loss by death and ill treatment of the civilian population, contrary to the Fourth Geneva Convention was only interim and contained no figures.2 However, he reported that two-thirds of Kuwaiti nationals sought refuge abroad and three-quarters of the labour force (over one million made up of OECD and Arab/Asian nationals) had been obliged to leave the country. For the estimated 200,000 Kuwaitis remaining, normal life was disrupted, health services downgraded, education at a halt and the civilian population was subjected to stringent measures to suppress resistance, with loss of life, detention, deportation, ill treatment, expropriation and destruction of property and reprisals and collective punishment. For a detailed analysis of the breach of international law by Iraq in respect of these activities, see Chapter 10.
As regards damage incurred by third states and their nationals, some twenty-one states have sought assistance from the UN Sanctions Committee for special economic problems arising from compliance with the Security Council Resolution 661 for economic sanctions against Iraq.3 A report of the UK House of Commons Foreign Affairs Committee identifies the crisis as causing ‘for the developing countries of the region, a double blow’, first from the impact of the rise in price of oil and second the loss of remittances by expatriate workers. The main victims were Jordan, which lost over 25 per cent of GNP; Yemen which lost over 10 per cent, and Egypt, nearly 3 per cent’.4 In its Resolution 674 the Security Council invited states to collect relevant information regarding their claims and those of their nationals for ‘restitution or financial
compensation by Iraq’ (para. 9), and the UN Compensation Commission set up under Resolution 692 (1991) has issued claim forms for individuals, corporations, governments and international organizations.5
Other heads of damage were incurred by third states. On 9 April 1990, the diplomatic community in Kuwait was informed of the ‘acceptance by Iraq of Kuwait’s request for unity’ and that all diplomatic and consular missions should close by 24 April. From that date services to diplomatic and consular missions were cut off, diplomats who stayed on were interned in their premises and on occasion forcible entry was made into specific missions, that into the French mission being particularly notable.6 Iraqi aerial attacks by Scud missiles caused loss of life, personal injuries and material damage and disruption of normal life in the territories of Saudi Arabia, Israel and Syria. The pollution of the atmosphere by burning oil wells and of the Gulf waters by crude oil affected states other than Kuwait. The United States, Saudi Arabia, United Kingdom and other allies incurred the costs of the military operations Desert Shield and Desert Storm undertaken to protect Saudi Arabia and to evict Iraq from Kuwait.7
Set against such loss, and as part of the general factual context, must be placed the humanitarian needs of the people of Iraq in the aftermath of the war. A report to the UN Secretary-General in August 1991 noted that the food, health and nutrition situation in Iraq was critical, with widespread shortages of medicine. The maintenance of food supply and sanitary measures were stated to be ‘absolutely necessary to prevent full scale famine and major human disaster developing in the country’.8
Scope of damage in Resolution 687
Paragraph 16 of Security Council Resolution 687 (1991) is drafted in the following terms:
The Security Council…acting under Chapter VII of the Charter of the United Nations…
16. Reaffirms that Iraq without prejudice to the debts and obligations of Iraq arising prior to 2 August 1990, which will be addressed through the normal mechanisms, is liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign
governments, nationals and corporations, as a result of Iraq’s unlawful invasion and occupation of Kuwait.
This paragraph constitutes the terms of reference for determination of Iraq’s liability; it, along with the rest of Resolution 687, was accepted by Iraq as a condition of the ceasefire.9 It imposes three clear limitations on the scope of damage recognizable by the UN international process: debts of Iraq prior to 2 August 1990 are excluded (this is further discussed under exhaustion of local remedies below); a causal link is required, as the ‘loss, damage and or injury’ is to occur ‘as a result of Iraq’s unlawful invasion and occupation of Kuwait’ and the damage is required to be ‘direct’. No definition of ‘direct’
is given, it being left to the UN Compensation Commission to provide guidelines. The first guidelines for expediting the processing of urgent claims were published by the Commission on 2 August 1991 and have proved controversial.10
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In two respects, however, Resolution 687 expressly extended the scope of damage: the specific mention of ‘environmental damage’ would seem to allow, at the very least, claims by the Kuwaiti government for clean-up costs in relation to burning wells and ‘the depletion of natural resources’ appears to contemplate, over and above claims for loss of profits on oil production during the period of Iraqi occupation, the capital loss of a state asset.
PROCEDURE FOR CLAIMS SETTLEMENT
Presentation of claims in time of peace
It is the practice of governments when they have claims against each other, to settle them directly by negotiation or lump-sum settlement, or to refer them either to a mixed tribunal composed of representatives of the two countries or to some form of third party settlement, mediation, conciliation or adjudication, either by the International Court of Justice, other established tribunal or specially instituted arbitral tribunal with members drawn from third state nationals and chaired by a national of a third state.11
Claims for loss suffered by nationals as a result of government action cannot usually in international law be presented to the wrongdoer state directly by the individual claimant. They are required to be espoused by the state of which the claimant has nationality. Where the alleged wrong has taken place within the jurisdiction of the wrongdoing state the rule of exhaustion of local remedies applies, under which the state is afforded the opportunity to remedy the wrong under its own legal system before the claim is proceeded with at the international level. However, where the wrong is committed outside the state’s jurisdiction, or the local remedies are manifestly futile or ineffective,12 the claimant is entitled to seek the immediate diplomatic protection of the state of which he has nationality. That state has the discretion whether to espouse a national’s claims and, if it does so, may seek to obtain settlement by diplomatic means, direct or through international forums.
The plea of local remedies requires consideration in respect of claims to be made against Iraq. As will be seen below, claims of injured nationals are to be presented to the UN Compensation Commission in consolidated form by states. The adoption of such a procedure—consolidated claim by the state, determination by an international commission and lump sum payment to the claimant state—appears to substitute an international procedure for any local exhaustion of remedies. As this procedure, along with liability for the damage caused, has in principle been accepted by Iraq as a condition of the establishment of a truce, it would seem that Iraq has waived any requirement that local remedies be exhausted. In any event it is questionable whether any such requirement operates in respect of most of the international obligations which are likely to be invoked against Iraq.
The applicability of the local remedies rule to international obligations may be framed in different ways. On one formulation it is only where an international obligation, in the terminology employed by the International Law Commission’s Rapporteur on State Responsibility, is one of ‘result’, that a state is given an opportunity to discharge its obligations, to invoke the local remedies rule and to produce a result different from that
aimed at in the obligation but treated as equivalent in effect. Thus the international minimum standard of treatment of aliens is treated as an obligation of result, permitting the wrongdoer state the opportunity by giving a remedy and compensation in its own courts to provide an alternative performance of its initial obligation.13 The obligations arising under the UN Charter, Vienna Conventions and Geneva Convention IV are not of this character; they impose ‘obligations of conduct’ upon the state party and allow it no last opportunity to rectify initial failures to perform the obligation.
A second formulation of the local remedies rule sees it as only applicable to acts committed within the jurisdiction of the state where local remedies are to be exhausted.14 Any claim in respect of acts committed in Kuwait or third states would not be acts within the jurisdiction of Iraq; acts committed in Kuwaiti territory are in international law acts committed within Kuwait’s jurisdiction; any attempted exercise of jurisdiction by Iraqi officials within Kuwaiti territory is unlawful by reason of the act of aggression on which it is based.
Even were Iraq’s claim to the territory of Kuwait to be well-founded, which it is not, the attempt to exercise it by force on the territory of a recognized state and member of the United Nations remains illegal and provides no basis for Iraqi exercise of jurisdiction.15
These arguments strongly support the inapplicability of exhaustion of remedies to the UN Claims Commission procedures. It is, however, also to be noted that any resort to local remedies in Iraqi courts, claiming loss sustained as a result of the acts of President Saddam Hussein’s army and civilian authorities in Kuwait, is likely to be ineffective or manifestly futile; it would be a bold Iraqi judge who made a ruling that President Hussein’s administration is to compensate Kuwaiti victims, even if such a legal remedy exists in Iraqi law. An Iraqi lawyer would no doubt confirm the ineffectiveness or futility of such a resort.
A more probable resort to local remedies may be made by victims who bring claims against Iraq in the courts of third states, particularly in countries where external Iraqi assets are frozen (some such assets are believed to be in the United States, Sweden and Switzerland.)16 The UN Secretary-General anticipates this problem in his report, in which he states that the UN Compensation Commission cannot be an organ with exclusive competence to consider claims arising from Iraq’s unlawful invasion and occupation of Kuwait. He recommends that the Commission should enact guidelines to deal with the likelihood of parallel actions on the international level in the Commission and on the domestic level in national courts, and in particular to ensure that the aggregate of compensation awarded by the Commission and national courts does not exceed the amount of the loss.17
Iran-US Claims Tribunal
The settlement machinery worked out to resolve the Iran-US dispute relating to the US hostages in Teheran provided an advance on these traditional methods for settlement of claims. It offers a useful precedent to the Security Council in the present case. In 1979 Iran had considerable external assets, and these were frozen when the US embassy staff were seized in Teheran. As part of the settlement reached in the Algiers Accords of 1981 which secured the release of the hostages, an Iran-US Tribunal was established to which the claims of the nationals and governments of each country against the other country
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might be directly presented for determination, and there was also provided a Security Account, funded initially by $1 billion of Iranian assets frozen in the United States, out of which awards made by the Tribunal in favour of US nationals could be made. The existence of this account greatly simplified effective enforcement of the Tribunal’s awards but the reference of all claims, however small, to individual adjudication and the composition of the three member panels of the Tribunal—an Iranian, a US and a third state judge, with the third state national presiding—resulted in lengthy hearings with opportunity for the Iranian judges to delay proceedings; so much so, that the Tribunal was not able to complete its task within ten years and the smaller outstanding claims were eventually settled by direct agreement between Iran and the United States.18
Peace treaties relating to war damage
The procedures for settlement of claims described above have been applied to questions of reparation of war damage, but generally only in relation to claims for loss from individual nationals of belligerent or neutral states and in an ancillary manner to the peace treaty which decides the broad issues of policy, usually in accordance with the victor state’s wishes, leaving only the details of individual claimants’ entitlement to be determined by reference to legal standards by the designated tribunal.19 Often, however, the onerous provisions of the peace treaty are subsequently modified in operation by reason of economic constraints in the defeated country and the need to rehabilitate the defeated state into the international community.
In parallel to procedures for the nationals of the victor state to claim war damage, the peace treaty is likely to provide for reparation for war damage directly suffered by the victor state: one usual provision is the restitution of property seized during the war—thus after the Second World War the Tripartite Claims Commission on which France, UK and USA were represented, supervised the return of monetary gold which Germany had taken from occupied countries;20 another provision may require reparation in kind—gold, ships of the merchant fleet, external assets and patents belonging to Germany were seized after the First World War,21 and after the Second World War reparations in kind were exacted by the dismantling of German industries, deliveries taken from German current production and the use of German labour in Allied countries.22 Indirect methods may also be employed; under threat of having their own external assets frozen by the victorious allied forces, Switzerland and Sweden released, after the Second World War, enemy assets held in these neutral countries to German owners who paid a lump sum to the Inter Allied Reparations Agency set up by the Paris Reparations Argeement 1946.23
Special procedures of Hague and Geneva laws of war
As regards breaches by the military authorities of the rules of war, a notional direct remedy is provided in Article 3 of the 1907 Hague Convention IV (re-enacted in the 1977 Geneva Additional Protocol I, Article 91). Article 3 provides that: ‘A belligerent party which violates the provision of the said Regulations shall, if the case demands, be liable to pay compensation. It shall be responsible for all acts committed by persons forming part of its armed forces.’