A CASE ANALYSIS ON: GERMANY V. POLAND (CHARZOW FACTORY CASE)

Facts

There was an agreement between Germany and Poland and that bilateral treaty was known as the Geneva Upper Silesia Convention 1922. It had been provided in that treaty that on transfer of sovereignty of certain territories from Germany to Poland after the First World War, existing proprietary rights were to be maintained except that the Polish Government was granted a right of expropriation under certain conditions with respect of all properties belonging to German nationals in Upper Silesia. The present dispute arose when Poland seized two companies there in breach of its International Obligations under the Upper Silesia Convention of 1922. Germany demanded reparation from Poland.

Issue:

  1. Whether the PCIJ has jurisdiction over the matter or not?
  2. Whether there was any violation of the agreement between Germany and Poland or not? If yes, should Poland pay reparation to Germany?
  3. Whether a state can be held responsible for expropriation of alien property?

Decision:

 It is a general conception of international law that every violation of an agreement between two independent states ensue an obligation to make reparation, adopted from Municipal law. The core principles which are common to the legal systems are considered as General Principles of law. Whenever there is a breach of any contract, the common principle that is followed is to claim for damages or compensation. The PCIJ accepted this principle and applied it in International law.

Poland was held to be in violation of the agreement entered with Germany and was made liable to repair any loss suffered by Germany due to the forfeiture of the two companies as they violated the obligation that Poland had towards Germany in observance of International law.

Since there was no international customary law or Treaty to determine the amount of reparation, the Court applied the General Principles of law.

Each and every nation has a duty not to breach the contract that they enter into with other nations. Since Poland breached the bilateral agreement, it violated the customary international law and thus state responsibility of Poland was invoked.

Analysis:

The rule of Permanent Court of International Justice was very appropriate, which was given in favour of Germany as the attitude of Polish Government towards two German companies was not in conformity with the articles of Convention concerning Upper Silesia, concluded at Geneva on May 15th, 1922 (hereinafter referred as Geneva Convention), thus violating the international agreement by unlawful expropriation of the said companies and that infers the state responsibility on Poland for reparation for such violation.

It is a general principal of International law that every violation of an engagement involves an obligation to make reparation adopted form municipal law, which is applied in this case along with the principal of state responsibility as a state is considered as an individual entity when it comes to an international dispute and it was accepted by all, repetition of which confirms that the decision is conform to existing law.

The PCIJ adequately justified its reasoning by bringing all the disputed matters and argument presented before it suo moto. At first it had justified its jurisdiction which was under question by Poland in respect of res judicata under Article 23 of Geneva Convention, but the court justified its jurisdiction by referring to Article 36 of the ICJ Statute. The Court also reasoned that the reparation declared was also justified by Article 6 -22, specially by Article 7 of Geneva Convention and by its interpretation. It also interpreted the municipal laws as well as customary international laws with a new view of International law concerning the subject matter of international law.

The appropriate interpretations were made by PCIJ at every point, such as the interpretation of Article 36 of the ICJ Statute to justify its jurisdiction. The Article said the parties can go to the court in all or any of the classes of legal dispute concerning a) the interpretation of a Treaty; b) the existence of any fact which, if established, would constitute a breach of an international obligation c) the nature or extent of the reparation to be made for the breach of an international obligation. It brought the general principle of law that every violation of an engagement involves an obligation of reparation. And the violation was clarified as Poland violated Article 7 of Geneva convention and illegally expropriated two of German factories. In this case, the court further interpreted that the expropriating state must, in addition to paying the reparation due in respect of a lawful expropriation, pay also damages for any loss sustained by the injured party.

The reasoning that the PCIJ has given is logical and consistent. First of all, the court interpreted the Geneva Convention, where the parties agreed to come before the court on any violation of the convention. Secondly, as one party denied the jurisdiction of the court citing the concerned law, the court cleared the ambiguity of that matter and the shadow over the jurisdiction became clear. Thirdly, when the court saw the violation of Geneva convention, the court ordered for indemnity referring to the principal of international law, as mentioned by the court, “It is a principle of international law that the reparation of a wrong may consist in an indemnity corresponding to the damage which the nationals of the injured State have suffered as a result of the act which is contrary to international law.” Fourthly, it was a question who would indemnify as therefor the court held, in a different plane to private law, with the claimant State being the one entitled to claim damages. It also noted that it was open for states to create private tribunals to adjudicate private claimants’ claims for breach of international law, but that nothing in Article 23 of the Geneva Convention affected Germany’s entitlement to claim damages in this case. Hence, the state (Poland) was made liable to indemnify Germany.

In the question of whether the expropriation was legal or illegal the PCIJ held that” this was not a situation where a governmental seizure would have been made “lawful” by simply paying “fair compensation”; it was a seizure of a kind that was Banned outrightly under the 1922 Geneva Convention and would only have been lawful had the treaty’s “exceptional” procedures been followed. Which is the fifth reasoning with adequate logic.

Where the indemnity amount is concerned the court give its reasoning, is the sixth consistent point. The court held “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-such are the principles which should serve to determine the amount of compensation due for an act contrary to international law”

Thought the liability, indemnity or reparation as well as state responsibility was not questioned but Advocate of Poland has raised some point on his dissenting opinion that the court had ignored some issues as well as some arguments regarding the jurisdiction of the PCIJ, but as far the documents is concerned it is evident that the court had considered his arguments with explanation. So, it can be concluded on the question of consideration, that the court did not omit any issues or arguments. Therefore, the decision was neither questioned nor weakened. Moreover, it was highly appreciated by jurists all over the world.

Conclusion:

This landmark case with exclusive interpretation binds the jurists of international law to have new thoughts about the matters of jurisdiction of international court, state responsibility, reparation as well as the necessary elements to weigh this matter by law. It also gives us legal precedent which will be a supportive material for understanding and analysis of the cases which are similar to the fact or in the matter of concerning issues regarding the matter of international law. However, it would not have any binding force as International Law doesn’t consider the previous judgments as binding during deciding new cases. The international law treats every new case with a fresh view as every case have its different facts as well as merits, which should not be influenced by other case.

By Vedika Kejriwal
SLCU, Bangalore.

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