Compensation for Environmental Damage Under International Law

Jason Rudall

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000034943
• Edition: 1
• Topic: Law
• Subtopic: Environmental Law
• Index: Law

Inspired by recent litigation, this book identifies and critically appraises the manifold and varied approaches to calculating compensation for damage caused to the environment.

It examines a wide range of practice on compensation – in general and specifically for environmental damage – from that of international courts and tribunals, as well as international commissions and regimes, to municipal approaches and other disciplines such as economics and philosophy. Compensation for Environmental Damage Under International Law synthesises these approaches with a view to identifying their blind spots, bringing clarity to an area where there exists broad discrepancy, and charting best practices that appropriately balance the manifold interests at stake. In particular, it is argued that best practice methodologies should ensure compensation serves to fully repair the environment, reflect the emerging ecosystems approach and any implications environmental damage may have for climate change, as well as take into account relevant equitable considerations.

This book is essential reading for academics, practitioners and students working in the field of environmental law.

1
Compensation under international law

Introduction

Awarding compensation has had a mixed practice in international law. While the ICJ has only ever made three compensation awards, ¹ pecuniary relief is common in other dispute settlement mechanisms. This chapter appraises the general principles that have governed compensation as a means of reparation. It surveys, in particular, the guidance provided by the Draft Articles on the Responsibility of States for Internationally Wrongful Acts and their commentaries and the major approaches to valuation adopted by international courts and tribunals, as well as scholarly opinion on compensation in international law. The chapter begins, however, by setting out the basic framework for reparations under international law.

Reparations under international law

Reparation is the remedy sought for damage that has been caused by the breach of an obligation. It is a fundamental principle of international law that a breach results in another obligation to repair the damage adequately, and this usually requires that an injured party should be put back in the same position as if the illegal act had not occurred. ² Article 31(1) of the ILC Draft Articles provides that a responsible State must ‘make full reparation for the injury caused’. The ILC has indicated that the formulation is intended to be ‘inclusive’ in this respect, covering as it does ‘material and moral damage broadly understood’. ³ That said, the ILC also intended that ‘merely abstract concerns or general interests of a State which is individually unaffected by the breach’ do not fall within the remit. ⁴ Material damage is ‘damage to property or other interests of the State and its nationals which is assessable in financial terms’ while moral damage ‘includes such items as individual pain and suffering, loss of loved ones or personal affront associated with an intrusion on one’s home or private life’. ⁵

Reparation may include restitution, compensation, rehabilitation, satisfaction or guarantees of non-repetition. Under the ILC’s Draft Articles, restitution, compensation and satisfaction are provided for in Article 34. Restitution means re-establishing the circumstances that existed prior to the commission of the wrongful act. Article 35 of the Draft Articles notes that restitution should be preferred unless it is materially impossible or involves a disproportionate burden to the award of compensation. Compensation is monetary relief for material and non-material loss. Satisfaction may include a formal acknowledgement of fault, recognition of the wrongful nature of the act committed, an apology or prosecutions of those responsible. Rehabilitation can be the provision of certain services to help with recovery from the damage suffered, such as medical care for example. Guarantees of non-repetition are declarations that wrongful acts will cease and might entail the adoption of specific measures or institutional reform to ensure the breach does not occur again.

An obligation to repair damage in full can still be incumbent on the responsible State where there are concurrent causes of the damage, except in situations of contributory fault. This was the case in the Corfu Channel dispute. ⁶ Albania had not been responsible for laying the mines that damaged British naval ships, but it had been responsible for failing to warn the United Kingdom about them. Nevertheless, it was found liable to pay the full amount of the United Kingdom’s claim. ⁷ A similar approach was evident in the United States Diplomatic and Consular Staff in Tehran case, in which Iran was responsible for failing to protect hostages seized by militant students who were not acting as organs or agents of the State. ⁸ This could similarly be the case where a natural event compounds damage. ⁹ That said, where part of the injury is severable from that caused by the responsible State, the responsible State may not be responsible for all the damage caused by its wrongful conduct. Tribunals may place the burden of proof on the responsible State to demonstrate that damage was not attributable to it. ¹⁰

A short history of reparations

An early indication of the duty to repair the damage caused by a wrongful act is evident in the work of Francisco de Vitoria, who described in the mid-sixteenth century the obligation incumbent on an enemy who had committed a wrongful act to redress any damage they had created. ¹¹ Hugo Grotius spoke of the duty to repair damage in De Jure Belli ac Pacis of 1625. ¹² Similarly, Samuel Pufendorf in his 1672 Elementorum Jurisprudentiae Universalis – Libri Duo explained how those who caused damage as a result of a wrongful act had to ‘restore as much as he contributed to the damage’. ¹³ Pufendorf went on to describe that the injured could not peacefully reconcile with the wrongdoer without compensation. ¹⁴ It became customary to pay war indemnities to the victors of a conflict. In the second half of the eighteenth century, Christian Wolf noted in his Principes du droit de la nature et des gens and Jus Gentium Methodo Scientica Pertractatum that any wrong caused to an individual of another State or another State at large was obliged to repair that damage. ¹⁵ In the early twentieth century, a duty to repair a wrongful act was generally considered as an obligation under customary international law. ¹⁶ The Permanent Court of International Justice (PCIJ) articulated the seminal formulation of reparation which retains significance to the present day. In its 1928 Choró w Factory case, the Court explained that

It is a principle of international law that the breach of an engagement involves an obligation to make reparation in an adequate form. Reparation therefore is the indispensable complement of a failure to apply a convention and there is no necessity for this to be stated in the Convention itself. Differences relating to reparations, which may be due by reason of failure to apply a convention, are consequently differences relating to its application. ¹⁷

And went on to observe:

The essential principle contained in the actual notion of an illegal act – a principle which seems to be established by international practice and in particular by the decisions of arbitral tribunals – is that reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. Restitution in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would not be covered by restitution in kind or payment in place of it. ¹⁸

The PCIJ and other international tribunals have also helped to develop the notion of compensation under international law, which we will now turn to consider.

Compensation under international law

While there is a preference for restitution under international law, compensation has been expressed in both case law and treaties as an appropriate means of reparation under international law in certain circumstances. Compensation may be for damage actually resulting from an internationally wrongful act and indirect or remote damage is generally excluded. A principle for determining the amount of compensation was offered by the PCIJ in the Chorzó w Factory case:

Restitution in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would be covered by restitution in kind or payment in place of it – such are the principles which should serve to determine the amount of compensation due for an act contrary to international law. ¹⁹

In the 1922 case of Norwegian Shipowner’s Claims, the Permanent Court of Arbitration noted the approach that should be taken in the assessment of compensation for damage to property and, where this was not possible, the role that equity may play in the determination:

It is common ground between the parties that just compensation, as it is understood in the United States, should be liberally awarded, and that it should be based upon the net value of the property taken. It has been somewhat difficult to fix real market value of some of these shipbuilding contracts. That value must be assessed ex aequo et bono. ²⁰

In the Rainbow Warrior case of 1990, an arbitral tribunal confirmed that ‘any violation by a State of any obli...