Liechtenstein Sues Germany before the World Court over a Dispute Concerning Property Seized by Czechoslovakia During WWII

On Friday, June 1, 2001, the Principality of Liechtenstein instituted proceedings before the International Court of Justice (ICJ or Court) against Germany over an alleged dispute concerning decisions of Germany to treat property claimed to belong to Liechtenstein nationals as German assets seized for purposes of reparation as a consequence of World War II.  The ICJ, which is the principal judicial organ of the United Nations entrusted with settling legal disputes between sovereign states, consists of 15 judges elected to nine-year terms by the UN General Assembly and Security Council.  The Court has its seat at the Peace Palace in The Hague, The Netherlands.

 

Liechtenstein's Application asserts that a series of decrees adopted by Czechoslovakia in 1945 seized property belonging to German and Hungarian nationals located on its territory and that Czechoslovakia applied these decrees also to other persons which it believed to be of German or Hungarian origin or ethnicity, treating Liechtenstein nationals as German nationals.  Czechoslovakia was an Allied country and belligerent against Germany during World War II.  According to Liechtenstein, the Liechtenstein property thus seized remains on Czech territory and has never been returned to its owners nor has compensation been offered or paid.

 

The Application further asserts that Article 3 of the Convention on the Settlement of Matters arising out of the War and the Occupation signed at Bonn on May 26, 1952 obligates Germany not to raise objections against measures concerning German external assets seized for the purpose of reparation or restitution.  In Liechtenstein's view, the 1952 Convention concerned only property of the German State or its nationals and, by reason of Liechtenstein's neutrality and the absence of any links between Liechtenstein and the conduct of war by Germany, does not apply to any Liechtenstein property affected by measures of the Allied powers.  Liechtenstein also maintains that it reached an understanding with Germany after 1952 that the Convention does not apply to Liechtenstein property, that Germany would regard such property as unlawfully seized, and that claims relating to such property would not be barred from consideration by the German courts.

 

Liechtenstein complains that Germany's Federal Constitutional Court ruled on January 28, 1998, in connection with a private lawsuit brought by Prince Hans Adam II of Liechtenstein, that a painting in the possession of the Historic Monument Offices in Brno, Czech Republic and on loan to the City of Cologne, Germany, which the Prince claimed was among the Liechtenstein property seized in 1945, could not be attached and was to be treated by the German courts as German property under the 1952 Convention.  The painting was released and returned to the Czech Republic.  Liechtenstein claims that this decision, which is unappealable and binding upon Germany, is attributable to Germany as a matter of international law.

 

Based on Germany's rejection of Liechtenstein's protests during subsequent consultations, Liechtenstein maintains that Germany takes the view, contrary to the post-1952 understanding between Germany and Liechtenstein, that Liechtenstein assets as a whole were "seized for the purpose of reparation or restitution, or as a result of the state of war" within the meaning of the 1952 Convention, even though the decision of Germany's Federal Constitutional Court dealt with only one painting.

 

Liechtenstein's Application requests the Court to declare that (a) by its conduct in and since 1998, Germany has failed to respect the rights of Liechtenstein and its nationals with respect to the Liechtenstein property seized in 1945, and (b) Germany has breached international law by reason of its failure to offer compensation for losses suffered by Liechtenstein and/or its nationals.  In addition, Liechtenstein is asking the Court to declare that Germany has incurred international legal responsibility and must make appropriate reparation to Liechtenstein for the damage suffered, such reparation to be determined in a separate phase of the proceedings in the absence of agreement between the parties.

 

As the basis of the Court's jurisdiction, Liechtenstein is relying on Article 1 of the European Convention for the Peaceful Settlement of Disputes of April 29, 1957, ratified by Germany on April 18, 1961 and by Liechtenstein on February 18, 1980.  According to Article 1, the state parties to the Convention "shall submit to the judgement of the International Court of Justice all international legal disputes which may arise between them including, in particular, those concerning: (a) the interpretation of a treaty; (b) any question of international law; (c) the existence of any fact which, if established, would constitute a breach of an international obligation; (d) the nature or extent of the reparation to be made for the breach of an international obligation."

 

As is usual in "involuntary" cases brought unilaterally by claimant states, Germany is likely to argue that the Court lacks jurisdiction to entertain Liechtenstein's Application and/or that the Application is inadmissible.  One of the grounds for dismissal might lie in the "necessary third party" rule that has been developed and administered by the Court in its jurisprudence.  Based on precedents, this would require a showing by Germany that the Court's decision in this case necessarily would involve a determination of the rights and obligations of the Czech Republic, an absent third state that has not consented to these proceedings, and that such a determination would not only affect and have legal implications for the interests or rights and obligations of the Czech Republic, but would form the very subject-matter of the Court's decision on the merits of this case.  The Czech Republic is not a party to the European Convention for the Peaceful Settlement of Disputes, so that it cannot be said to have consented to the Court's jurisdiction under that treaty.  Notwithstanding the fact that Article 32(1) of the Convention provides that it "shall remain applicable as between the Parties thereto, even though a third State, whether a Party to the Convention or not, has an interest in the dispute," the Court will administer the "necessary third party" rule independently in order to determine whether it has jurisdiction to entertain Liechtenstein's Application.

 

Based on Article 27(a) of the European Convention for the Peaceful Settlement of Disputes, which provides that the Convention is not applicable to "disputes relating to facts or situations prior to the entry into force of this Convention as between the parties to the dispute," Germany likely will argue that the dispute relates to facts or situations arising before the Convention entered into force as between the parties to this case (namely, on February 18, 1980, the date of Liechtenstein's ratification).

 

If Liechtenstein prevails on jurisdiction, it could rely in support of its claims on recent Court decisions that have held that the international responsibility of a state is engaged by the action of the competent organs and authorities in that state (including a state's courts), and that such organs and authorities are obligated to act in conformity with the international undertakings (including treaties) of the state concerned.  If Liechtenstein ultimately is successful on the merits, it could claim the restitution of the property involved or, if that is not possible, monetary compensation.

 

The question of cultural preservation and restitution, and especially the restitution of artwork stolen by the Nazi regime, has taken on increasing prominence recently.  Even though the issues in Liechtenstein's case do not directly relate to this question (the property in question was not stolen or seized by the Nazis, but was seized by Czechoslovakia, an Allied power), the timing of this action might be viewed against the background of this development and the action itself is likely to add to the pending debate over the return of assets stolen or seized during World War II.

 

The text of the Court's press communiqué on this case (No. 2001/14) is available on its Web site: <http://www.icj-cij.org>.

 

About the Author:

Dr. Pieter H.F. Bekker practices international law and arbitration at White & Case LLP in New York City, and formerly served as Special Assistant to the Registrar of the ICJ in The Hague.  He has written a book ("Commentaries on World Court Decisions (1987-1996)") and numerous articles and notes on the ICJ.  He co-chaired the 94th Annual Meeting of the American Society of International Law in April 2000.