d e c i s i o n

D E C I S I O NVITUG, J.: The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity extended to the Asian Development Bank ("ADB"). On 27 January 1993, private respondent initiated NLRC-NCR Case No. 00-01-0690-93 for his alleged illegal dismissal by ADB and the latter's violation of the "labor-only" contracting law. Two summonses were served, one sent directly to the ADB and the other through the Department of Foreign Affairs ("DFA"), both with a copy of the complaint. Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President and Officers, were covered by an immunity from legal process except for borrowings, guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement"). The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit. In time, the Labor Arbiter rendered his decision, dated31 August 1993, that concluded:"WHEREFORE, above premises considered, judgment is hereby rendered declaring the complainant as a regular employee of respondent ADB, and the termination of his services as illegal. Accordingly, respondent Bank is hereby ordered:"1. To immediately reinstate the complainant to his former position effective September 16, 1993;"2. To pay complainant full backwages from December 1, 1992 to September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9 months);"3. And to pay complainants other benefits and without loss of seniority rights and other privileges and benefits due a regular employee of Asian Development Bank from the time he was terminated on December 31, 1992;"4. To pay 10% attorney's fees of the total entitlements."[1] The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA referred the matter to the National Labor Relations Commission ("NLRC"); in its referral, the DFA sought a "formal vacation of the void judgment." Replying to the letter, the NLRC Chairman, wrote:"The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves de Castro, by the National Labor Relations Commission, has been erroneously premised on Art. 218(c) of the Labor Code, as cited in the letter of Secretary Padilla, considering that the provision deals with 'a question, matter or controversy within its (the Commission) jurisdiction' obviously referring to a labor dispute within the ambit of Art. 217 (on jurisdiction of Labor Arbiters and the Commission over labor cases)."The procedure, in the adjudication of labor cases, including raising of defenses, is prescribed by law. The defense of immunity could have been raised before the Labor Arbiter by a special appearance which, naturally, may not be considered as a waiver of the very defense being raised. Any decision thereafter is subject to legal remedies, including appeals to the appropriate division of the Commission and/or a petition for certiorari with the Supreme Court, under Rule 65 of the Rules of Court. Except where an appeal is seasonably and properly made, neither the Commission nor the undersigned may review, or even question, the propriety of any decision by a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen Commissioners) only to promulgate rules of procedure or to formulate policies (Art. 213, Labor Code)."On the other hand, while the undersigned exercises 'administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he does not have the competence to investigate or review any decision of a Labor Arbiter. However, on the purely administrative aspect of the decision-making process, he may cause that an investigation be made of any misconduct, malfeasance or misfeasance, upon complaint properly made."If the Department of Foreign Affairs feels that the action of Labor Arbiter Nie

ves de Castro constitutes misconduct, malfeasance or misfeasance, it is suggested that an appropriate complaint be lodged with the Office of the Ombudsman."Thank you for your kind attention."[2] Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's resolution of 31 January 1994, respondents were required to comment. Petitioner was later constrained to make an application for a restraining order and/or writ of preliminary injunction following the issuance, on 16 March 1994, by the Labor Arbiter of a writ of execution. In a resolution, dated 07 April 1994, the Court issued the temporary restraining order prayed for. The Office of the Solicitor General (OSG), in its comment of 26 May 1994, initially assailed the claim of immunity by the ADB. Subsequently, however, it submitted a Manifestation (dated 20 June 1994) stating, among other things, that "after a thorough review of the case and the records," it became convinced that ADB, indeed, was correct in invoking its immunity from suit under the Charter and the Headquarters Agreement. The Court is of the same view. Article 50(1) of the Charter provides:The Bank shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities.[3]Under Article 55 thereof -All Governors, Directors, alternates, officers and employees of the Bank, including experts performing missions for the Bank:(1) shall be immune from legal process with respect of acts performed by them in their official capacity, except when the Bank waives the immunity.[4]Like provisions are found in the Headquarters Agreement. Thus, its Section 5 reads:"The Bank shall enjoy immunity from every form of legal process, except in cases arising out of, or in connection with, the exercise of its powers to borrow money, to guarantee obligations, or to buy and sell or underwrite the sale of securities.[5]And, with respect to certain officials of the bank, Section 44 of the agreement states:Governors, other representatives of Members, Directors, the President, Vice-President and executive officers as may be agreed upon between the Government and the Bank shall enjoy, during their stay in the Republic of the Philippines in connection with their official duties with the Bank:x x x x x x x x x(b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity.[6]The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form. The Banks officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. In World Health Organization vs. Aquino,[7] we have declared:It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government x x x it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government, x x x or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction x x x as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that `in such cases the ju

dicial department of government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction.'"[8] To the same effect is the decision in International Catholic Migration Commission vs. Calleja,[9] which has similarly deemed the Memoranda of the Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of Government that ICMC x x x enjoy(s) immunities accorded to international organizations" and which determination must be held "conclusive upon the Courts in order not to embarrass a political department of Government. In the instant case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the government's own recognition of ADB's immunity. Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law.[10] In Southeast Asian Fisheries Development Center vs. Acosta,[11] the Court has cited with approval the opinion[12] of the then Minister of Justice; thus -"One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. (See Jenks, Id., pp. 37-44). The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states."[13] Contrary to private respondent's assertion, the claim of immunity is not here being raised for the first time; it has been invoked before the forum of origin through communications sent by petitioner and the ADB to the Labor Arbiter, as well as before the NLRC following the rendition of the questioned judgment by the Labor Arbiter, but evidently to no avail. In its communication of 27 May 1993, the DFA, through the Office of Legal Affairs, has advised the NLRC:"Respectfully returned to the Honorable Domingo B. Mabazza, Labor Arbitration Associate, National Labor Relations Commission, National Capital Judicial Region, Arbitration Branch, Associated bank Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of Hearing addressed to the Asian Development Bank, in connection with the aforestated case, for the reason stated in the Department's 1st Indorsement dated 23 March 1993, copy attached, which is self-explanatory."In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is sustained by the Department of Foreign Affairs, a continuous hearing of this case erodes the credibility of the Philippine government before the international community, let alone the negative implication of such a suit on the official relationship of the Philippine government with the ADB."For the Secretary of Foreign Affairs(Sgd.)"SIME D. HIDALGOAssistant Secretary"[14]The Office of the President, likewise, has issued on 18 May 1993 a letter to the Secretary of Labor, viz:"Dear Secretary Confesor,"I am writing to draw your attention to a case filed by a certain Jose C. Magnayi against the Asian Development Bank and its President, Kimimasa Tarumizu, before the National Labor Relations Commission, National Capital Region Arbitration Board (NLRC NCR Case No. 00-01690-93)."Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de Castro, addressed a Notice of Resolution/Order to the Bank which brought it to the attention of the Department of Foreign Affairs on the ground that the service of such notice was in violation of the RP-ADB Headquarters Agreement which provided, inter-alia, for the immunity of the Bank, its President and officers from every form of legal process, except only, in cases of borrowings, guarantees or the sale of securities."The Department of Foreign Affairs, in turn, informed Labor Arbiter Nieves V. de

Castro of this fact by letter dated March 22, copied to you."Despite this, the labor arbiter in question persisted to send summons, the latest dated May 4, herewith attached, regarding the Magnayi case."The Supreme Court has long settled the matter of diplomatic immunities. In WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic immunities of foreign officials recognized by the Philippine government. Such decision by the Supreme Court forms part of the law of the land."Perhaps you should point out to Labor Arbiter Nieves V. de Castro that ignorance of the law is a ground for dismissal."Very truly yours,(Sgd.)JOSE B. ALEJANDRINOChairman, PCC-ADB"[15] Private respondent argues that, by entering into service contracts with different private companies, ADB has descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit. In the case of Holy See vs. Hon. Rosario, Jr.,[16] the Court has held: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 act or acts jure gestionis.x x x x x x x x xCertainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, 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, especially when it is not undertaken for gain or profit.[17]The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach. With regard to the issue of whether or not the DFA has the legal standing to file the present petition, and whether or not petitioner has regarded the basic rule that certiorari can be availed of only when there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law, we hold both in the affirmative. The DFA's function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenged, entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena.[18] In Holy See vs. Hon. Rosario, Jr.,[19] this Court has explained the matter in good detail; viz:"In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity."In the United States, the procedure followed is the process of 'suggestion,' where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune f

rom suit, he, in turn, asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a 'suggestion' (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941])."In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge. The Solicitor General embodied the 'suggestion' in a manifestation and memorandum as amicus curiae."In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity."In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America vs. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved."[20] Relative to the propriety of the extraordinary remedy of certiorari, the Court has, under special circumstances, so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction,[21] or (b) where the order or decision is a patent nullity,[22] which, verily, are the circumstances that can be said to obtain in the present case. When an adjudicator is devoid of jurisdiction on a matter before him, his action that assumes otherwise would be a clear nullity. WHEREFORE, the petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND VOID. The temporary restraining order issued by this Court on 07 April 1994 is hereby made permanent. No costs. SO ORDERED. Bellosillo, Kapunan, and Hermosisima, Jr., JJ., concur. Padilla, (Chairman), J., no part.

JEFFREY LIANG (HUEFENG), petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.R E S O L U T I O NYNARES-SANTIAGO, J.: This resolves petitioners Motion for Reconsideration of our Decision dated January 28, 2000, denying the petition for review. The Motion is anchored on the following arguments:1) THE DFAS DETERMINATION OF IMMUNITY IS A POLITICAL QUESTION TO BE MADE BY THE EXECUTIVE BRANCH OF THE GOVERNMENT AND IS CONCLUSIVE UPON THE COURTS.2) THE IMMUNITY OF INTERNATIONAL ORGANIZATIONS IS ABSOLUTE.3) THE IMMUNITY EXTENDS TO ALL STAFF OF THE ASIAN DEVELOPMENT BANK (ADB).4) DUE PROCESS WAS FULLY AFFORDED THE COMPLAINANT TO REBUT THE DFA PROTOCOL.5) THE DECISION OF JANUARY 28, 2000 ERRONEOUSLY MADE A FINDING OF FACT ON THE MERITS, NAMELY, THE SLANDERING OF A PERSON WHICH PREJUDGED PETITIONERS CASE BEFORE

THE METROPOLITAN TRIAL COURT (MTC)-MANDALUYONG.6) THE VIENNA CONVENTION ON DIPLOMATIC RELATIONS IS NOT APPLICABLE TO THIS CASE. This case has its origin in two criminal Informations[1] for grave oral defamation filed against petitioner, a Chinese national who was employed as an Economist by the Asian Development Bank (ADB), alleging that on separate occasions on January 28 and January 31, 1994, petitioner allegedly uttered defamatory words to Joyce V. Cabal, a member of the clerical staff of ADB. On April 13, 1994, the Metropolitan Trial Court of Mandaluyong City, acting pursuant to an advice from the Department of Foreign Affairs that petitioner enjoyed immunity from legal processes, dismissed the criminal Informations against him. On a petition for certiorari and mandamus filed by the People, the Regional Trial Court of Pasig City, Branch 160, annulled and set aside the order of the Metropolitan Trial Court dismissing the criminal cases.[2] Petitioner, thus, brought a petition for review with this Court. On January 28, 2000, we rendered the assailed Decision denying the petition for review. We ruled, in essence, that the immunity granted to officers and staff of the ADB is not absolute; it is limited to acts performed in an official capacity. Furthermore, we held that the immunity cannot cover the commission of a crime such as slander or oral defamation in the name of official duty. On October 18, 2000, the oral arguments of the parties were heard. This Court also granted the Motion for Intervention of the Department of Foreign Affairs. Thereafter, the parties were directed to submit their respective memorandum. For the most part, petitioners Motion for Reconsideration deals with the diplomatic immunity of the ADB, its officials and staff, from legal and judicial processes in the Philippines, as well as the constitutional and political bases thereof. It should be made clear that nowhere in the assailed Decision is diplomatic immunity denied, even remotely. The issue in this case, rather, boils down to whether or not the statements allegedly made by petitioner were uttered while in the performance of his official functions, in order for this case to fall squarely under the provisions of Section 45 (a) of the Agreement Between the Asian Development Bank and the Government of the Republic of the Philippines Regarding the Headquarters of the Asian Development Bank, to wit:Officers ands staff of the Bank, including for the purpose of this Article experts and consultants performing missions for the Bank, shall enjoy the following privileges and immunities:(a) Immunity from legal process with respect to acts performed by them in their official capacity except when the Bank waives the immunity. After a careful deliberation of the arguments raised in petitioners and intervenors Motions for Reconsideration, we find no cogent reason to disturb our Decision of January 28, 2000. As we have stated therein, the slander of a person, by any stretch, cannot be considered as falling within the purview of the immunity granted to ADB officers and personnel. Petitioner argues that the Decision had the effect of prejudging the criminal case for oral defamation against him. We wish to stress that it did not. What we merely stated therein is that slander, in general, cannot be considered as an act performed in an official capacity. The issue of whether or not petitioners utterances constituted oral defamation is still for the trial court to determine. WHEREFORE, in view of the foregoing, the Motions for Reconsideration filed by petitioner and intervenor Department of Foreign Affairs are DENIED with FINALITY. SO ORDERED.

NORTH SEA CONTINENTAL SHELF CASES (SUMMARY)© Ruwanthika Gunaratne and Public International Law at https://ruwanthikagunaratne.wordpress.com, 2008 � present. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ruwanthika Gunaratne and Public International Law with appropriate and specific direction to the original content.

Name of the Case: The North Sea Continental Shelf Cases (Germany/Denmark; Germany/Netherlands); Year of Decision: 1969; and Court: ICJ.NB: This post discussed only  aspects of the case related to treaty or customary international law.Overview: The jurisprudence of the North Sea Continental Shelf Cases sets out the dual requirement for forming customary international law � State practice (objective element) and opinio juris (subjective element). It elaborated the criteria necessary to establish State practice � widespread and representative participation. The case highlighted that the State practice of importance were of those States whose interests were affected by the custom. It also identified the fact that uniform and consistent practice was necessary to show opinio juris � a belief that the practice amounts to a legal obligation. The North Sea Continental Self Cases also dispelled the myth that duration of the practice (i.e. the number of years) was an essential factor in forming customary international law. The case involved the delimitation of the continental shelf areas in the North Sea between Germany and Denmark and Germany and Netherlands beyond the partial boundaries previously agreed upon by these States. The parties requested the ICJ to decide the principles and rules of international law that are applicable to the above delimitation. The parties disagreed on the applicable principles or rules of delimitation � Netherlands and Denmark relied on the principle of equidistance (the method of determining the boundaries in such a way that every point in the boundary is equidistant from the nearest points of the baselines from which the breath of the territorial sea of each State is measured). Germany sought to get a decision in favour of the notion that the delimitation of the relevant continental shelf is governed by the principle that each coastal state is entitled to a just and equitable share (hereinafter called just and equitable principle/method). Contrary to Denmark and Netherlands, Germany argued that the principle of equidistance was neither a mandatory rule in delimitation of the continental shelf nor a rule of customary international law that was not binding on Germany. The court was not asked to delimit � the parties agreed to delimit the continental shelf as between their countries, by agreement, after the determination of the ICJ on the applicable principles.Facts of the Case:Netherlands and Denmark had drawn partial boundary lines based on the equidistance principle(A-B and C-D). An agreement on further prolongation of the boundary proved difficult because Denmark and Netherlands wished this prolongation to take place based on the equidistance principle (B-E and D-E) where as Germany was of the view that, together, these two boundaries would produce an inequitable result for her. Germany stated that due to its concave coastline, such a line would result in her loosing out on her share of the continental shelf based on proportionality to the length of its North Sea coastline. The Court had to decide the principles and rules of international law applicable to this delimitation. In doing so, the court had to decide if the principles espoused by the parties were binding on the parties either through treaty law or customary international law.Questions before the Court (as relevant to this post):Is Germany under a legal obligation to accept the equidistance-special circumstances principle, contained in Article 6 of the Geneva Convention, either as a customary international law rule or on the basis of the Geneva Convention?The Court�s Decision:The use of the equidistance method had not crystallised into customary law and was is not obligatory for the delimitation of the areas in the North Sea related to the present proceedings.Relevant Findings of the Court:Nature of the treaty obligation: Is the 1958 Geneva Convention, and in particular Article 6, binding on Germany?1. Article 6 of the Geneva Convention on the Continental Shelf states that unless the parties have agreed on a method for delimitation or unless special circumstances exist, the equidistance method would apply (see Article 6). Germany has signed but not ratified the Geneva Convention, while Netherlands and Denmark are parties to the Convention. The latter two States argue that while Germany is not

a party to the Convention (not having ratified it), she is still bound by Article 6 of the Convention because:��(1)  by conduct, by public statements and proclamations, and in other ways, the Republic has unilaterally assumed the obligations of the Convention; or has manifested its acceptance of the conventional regime; or has recognized it as being generally applicable to the delimitation of continental shelf areas�(2) the Federal Republic had held itself out as so assuming, accepting or recognizing, in such a manner as to cause other States, and in particular Denmark and the Netherlands, to rely on the attitude thus taken up� (the latter is called the principle of estoppel).2. The Court rejected the first argument. It stated that only a �very definite very consistent course of conduct on the part of a State� would allow the court to presume that a State had somehow become bound by a treaty (by a means other than in a formal manner: i.e. ratification) when the State was �at all times fully able and entitled to�� accept the treaty commitments in a formal manner. The Court held that Germany had not unilaterally assumed obligations under the Convention. The court also took notice of the fact that even if Germany ratified the treaty, she had the option of entering into a reservation on Article 6 following which that particular article would no longer be applicable to Germany (i.e. even if one were to assume that Germany had intended to become a party to the Convention, it does not presuppose that it would have also undertaken those obligations contained in Article 6).3. NB: The Vienna Convention on the Law of Treaties of 1969 (VCLT), which came into force in 1980, discusses more fully the obligations of third States to treaties. It clearly stipulates that an obligation arises for a third State from a provision of a treaty only if (1) the parties to the treaty intend the provision to create this obligation for the third States; and (2) the third State expressly accepts that obligation in writing (A. 35 of the VCLT). The VCLT was not in force when the ICJ deliberated on this case. However, as  seen above, the ICJ�s position was consistent the VCLT. (See the relevant provisions of the Vienna Convention on the Law of Treaties).4. The court held that the existence of a situation of estoppel would have allowed Article 6 to become binding on Germany � but held that Germany�s action did not support an argument for estoppel. The court also held that the mere fact that Germany may not have specifically objected to the equidistance principle as contained in Article 6 is not sufficient to state that the principle is now binding upon it.5. In conclusion, the court held that Germany had not acted in any way to incur obligations contained in Article 6 of the Geneva Convention. The equidistance � special circumstances rule was not binding on Germany by way of treaty.Nature of the customary international law obligation: Is Germany bound by the provisions of Article 6 of the Geneva Convention by way of customary international law?6. Netherlands and Denmark argued that Article 6 also reflected �the accepted rule of general international law on the subject of continental shelf delimitation� and existed independently of the Convention. Therefore, they argued, Germany is bound by it by way of customary international law.7. To decide if the equidistance principle bound Germany by way of customary international law, the court examined (1) the status of the principle contained in Article 6 as it stood when the Convention was being drawn up (2) and after the latter came into force.What was the customary law status of Article 6 at the time of drafting the Convention?8. The court held the principle of equidistance, as contained in Article 6, did not form a part of existing or emerging customary international law at the time of drafting the Convention. The Court supported this finding based on (1) the hesitation expressed by the drafters of the Convention � International Law Commission � on the inclusion of Article 6 (para. 62) and (2) the fact reservations to Article 6 was permissible under the Convention (Article 12). The court held:� Article 6 is one of those in respect of which, under the reservations article of

the Convention (Article 12) reservations may be made by any State on signing, ratifying or acceding for, speaking generally, it is a characteristic of purely conventional rules and obligations that, in regard to them, some faculty of making unilateral reservations may, within certain limits, be admitted; whereas this cannot be so in the case of general or customary law rules and obligations which, by their very nature, must have equal force for all members of the international community, and cannot therefore be the subject of any right of unilateral exclusion exercisable at will by any one of them in its own favor�. The normal inference would therefore be that any articles that do not figure among those excluded from the faculty of reservation under Article 12, were not regarded as declaratory of previously existing or emergent rules of law (see para 65 for a counter argument and the court�s careful differentiation)��Did the provisions in Article 6 on the equidistance principle attain the customary law status after the Convention came into force?9. The court then examined whether the rule contained in Article 6 had become customary international law after the Convention entered into force � either due the convention itself (i.e., if enough States had ratified the Convention in a manner to fulfil the criteria specified below), or because of subsequent State practice (i.e. even if adequate number of States had not ratified the Convention one could find sufficient State practice to meet the criteria below). The court held that Article 6 of the Convention had not attained a customary law status (compare the 1958 Geneva Convention with the four Geneva Conventions on 1949 in the field of international humanitarian law in terms of its authority as a pronouncement of customary international law).10. For a customary rule to emerge the court held that it needed: (1) very widespread and representative participation in the convention, including States whose interests were specially affected (i.e. generality); and (2) virtually uniform practice (i.e. consistent and uniform usage) undertaken in a manner that demonstrates (3) a general recognition of the rule of law or legal obligation (i.e. opinio juries). In the North Sea Continental Shelf cases the court held that the passage of a considerable period of time was unnecessary (i.e. duration) for the formation of a customary law.Widespread and representative participation11. The court held that the first criteria was not met. The number of ratifications and accessions to the convention (39 States) were not adequately representative (including of coastal States � i.e. those States whose rights are affected) or widespread.Duration12. The court held that duration taken for the customary law rule to emerge is not as important as widespread and representative participation, uniform usage and the existence of an opinio juris.�Although the passage of only a short period of time (in this case, 3 � 5 years) is not necessarily, or of itself, a bar to the formation of a new rule of customary international law on the basis of what was originally a purely conventional rule, an indispensable requirement would be that within the period in question, short though it might be, State practice, including that of States whose interests are specially affected, should have been both extensive and virtually uniform in the sense of the provision invoked and should moreover have occurred in such a way as to show a general recognition that a rule of law or legal obligation is involved (text in brackets added).�Opinio juris13. 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).14. The Court examined 15 cases where States had delimited their boundaries using the equidistance method, after the Convention came into force (paras. 75 -77). The court concluded, even if there were some State practice in favour of the equidistance principle the court could not deduct the necessary opinio juris from this State practice. The North Sea Continental Shelf Cases confirmed that both State

practice (the objective element) and opinio juris (the subjective element) are essential pre-requisites for the formation of a customary law rule. This is consistent with Article 38 (1) (b) of the Statute of the ICJ. The following explains the concept of opinio jurisand the difference between customs (i.e. habits) and customary law:Not only must the acts concerned amount to a settled practice, but they must also be such, or be carried out in such a way, as to be evidence of a belief that this practice is rendered obligatory by the existence of a rule of law requiring it. The need for such a belief, i.e, the existence of a subjective element, is implicit in the very notion of the opinio juris sive necessitatis. The States concerned must therefore feel that they are conforming to what amounts to a legal obligation. The frequency, or even habitual character of the acts is not in itself enough. There are many international acts, e.g., in the field of ceremonial and protocol, which are performed almost invariably, but which are motivated only by considerations of courtesy, convenience or tradition, and not by any sense of legal duty.15.  The court concluded that the equidistance principle was not binding on Germany by way of treaty or customary international law because, in the case of the latter, the principle had not attained a customary international law status at the time of the entry into force of the Geneva Convention or thereafter. As such, the court held that the use of the equidistance method is not obligatory for the delimitation of the areas concerned in the present proceedings.© Ruwanthika Gunaratne and Public International Law at https://ruwanthikagunaratne.wordpress.com, 2008 � present. Unauthorized use and/or duplication of this material without express and written permission from this blog�s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Ruwanthika Gunaratne and Public International Law with appropriate and specific direction to the original content.

THE REPUBLIC OF INDONESIA, HIS EXCELLENCY AMBASSADOR SOERATMIN, and MINISTER COUNSELLOR AZHARI KASIM, petitioners, vs.JAMES VINZON, doing business under the name and style of VINZON TRADE AND SERVICES, respondent.D E C I S I O NAZCUNA, J: 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] 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] 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] 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] 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] 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] On August 16, 2002, it denied herein petitioners motion for reconsideration.[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] 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] As enunciated in Sanders v. Veridiano II,[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] A contrary attitude would unduly vex the peace of nations.[12] The rules of International Law, however, are neither unyielding nor impervious to change. The increasing need of sovereign States to enter into purely commerci

al 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] In United States v. Ruiz,[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] as well as the bidding for the operation of barber shops in Clark Air Base in Angeles City.[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 orjure 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] 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] 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 ambassador. 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] 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:

x x x1. 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.x x x 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] 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. SO ORDERED.

KHOSROW MINUCHER, petitioner, vs. HON. COURT OF APPEALS and ARTHUR SCALZO, respondents.D E C I S I O NVITUG, J.: Sometime in May 1986, an Information for violation of Section 4 of Republic Act No. 6425, otherwise also known as the Dangerous Drugs Act of 1972, was filed against petitioner Khosrow Minucher and one Abbas Torabian with the Regional Trial Court, Branch 151, of Pasig City. The criminal charge followed a buy-bust operation conducted by the Philippine police narcotic agents in the house of Minucher, an Iranian national, where a quantity of heroin, a prohibited drug, was said to have been seized. The narcotic agents were accompanied by private respondent Arthur Scalzo who would, in due time, become one of the principal witnesses for the prosecution. On 08 January 1988, Presiding Judge Eutropio Migrino rendered a decision acquitting the two accused. On 03 August 1988, Minucher filed Civil Case No. 88-45691 before the Regional Trial Court (RTC), Branch 19, of Manila for damages on account of what he claimed to have been trumped-up charges of drug trafficking made by Arthur Scalzo. The Manila RTC detailed what it had found to be the facts and circumstances surrounding the case."The testimony of the plaintiff disclosed that he is an Iranian national. He came to the Philippines to study in the University of the Philippines in 1974. In 1976, under the regime of the Shah of Iran, he was appointed Labor Attach for the Iranian Embassies in Tokyo, Japan and Manila, Philippines. When the Shah of Iran was deposed by Ayatollah Khomeini, plaintiff became a refugee of the United Nations and continued to stay in the Philippines. He headed the Iranian National Resistance Movement in the Philippines.He came to know the defendant on May 13, 1986, when the latter was brought to his house and introduced to him by a certain Jose Iigo, an informer of the Intelligence Unit of the military. Jose Iigo, on the other hand, was met by plaintiff at the office of Atty. Crisanto Saruca, a lawyer for several Iranians whom plaintiff assisted as head of the anti-Khomeini movement in the Philippines.During his first meeting with the defendant on May 13, 1986, upon the introduction of Jose Iigo, the defendant expressed his interest in buying caviar. As a matter of fact, he bought two kilos of caviar from plaintiff and paid P10,000.00 for

it. Selling caviar, aside from that of Persian carpets, pistachio nuts and other Iranian products was his business after the Khomeini government cut his pension of over $3,000.00 per month. During their introduction in that meeting, the defendant gave the plaintiff his calling card, which showed that he is working at the US Embassy in the Philippines, as a special agent of the Drug Enforcement Administration, Department of Justice, of the United States, and gave his address as US Embassy, Manila. At the back of the card appears a telephone number in defendants own handwriting, the number of which he can also be contacted.It was also during this first meeting that plaintiff expressed his desire to obtain a US Visa for his wife and the wife of a countryman named Abbas Torabian. The defendant told him that he [could] help plaintiff for a fee of $2,000.00 per visa. Their conversation, however, was more concentrated on politics, carpets and caviar. Thereafter, the defendant promised to see plaintiff again.On May 19, 1986, the defendant called the plaintiff and invited the latter for dinner at Mario's Restaurant at Makati. He wanted to buy 200 grams of caviar. Plaintiff brought the merchandize but for the reason that the defendant was not yet there, he requested the restaurant people to x x x place the same in the refrigerator. Defendant, however, came and plaintiff gave him the caviar for which he was paid. Then their conversation was again focused on politics and business.On May 26, 1986, defendant visited plaintiff again at the latter's residence for 18 years at Kapitolyo, Pasig. The defendant wanted to buy a pair of carpets which plaintiff valued at $27,900.00. After some haggling, they agreed at $24,000.00. For the reason that defendant did not yet have the money, they agreed that defendant would come back the next day. The following day, at 1:00 p.m., he came back with his $24,000.00, which he gave to the plaintiff, and the latter, in turn, gave him the pair of carpets.At about 3:00 in the afternoon of May 27, 1986, the defendant came back again to plaintiff's house and directly proceeded to the latter's bedroom, where the latter and his countryman, Abbas Torabian, were playing chess. Plaintiff opened his safe in the bedroom and obtained $2,000.00 from it, gave it to the defendant for the latter's fee in obtaining a visa for plaintiff's wife. The defendant told him that he would be leaving the Philippines very soon and requested him to come out of the house for a while so that he can introduce him to his cousin waiting in a cab. Without much ado, and without putting on his shirt as he was only in his pajama pants, he followed the defendant where he saw a parked cab opposite the street. To his complete surprise, an American jumped out of the cab with a drawn high-powered gun. He was in the company of about 30 to 40 Filipino soldiers with 6 Americans, all armed. He was handcuffed and after about 20 minutes in the street, he was brought inside the house by the defendant. He was made to sit down while in handcuffs while the defendant was inside his bedroom. The defendant came out of the bedroom and out from defendant's attach case, he took something and placed it on the table in front of the plaintiff. They also took plaintiff's wife who was at that time at the boutique near his house and likewise arrested Torabian, who was playing chess with him in the bedroom and both were handcuffed together. Plaintiff was not told why he was being handcuffed and why the privacy of his house, especially his bedroom was invaded by defendant. He was not allowed to use the telephone. In fact, his telephone was unplugged. He asked for any warrant, but the defendant told him to `shut up. He was nevertheless told that he would be able to call for his lawyer who can defend him.The plaintiff took note of the fact that when the defendant invited him to come out to meet his cousin, his safe was opened where he kept the $24,000.00 the defendant paid for the carpets and another $8,000.00 which he also placed in the safe together with a bracelet worth $15,000.00 and a pair of earrings worth $10,000.00. He also discovered missing upon his release his 8 pieces hand-made Persian carpets, valued at $65,000.00, a painting he bought for P30,000.00 together with his TV and betamax sets. He claimed that when he was handcuffed, the defendant took his keys from his wallet. There was, therefore, nothing left in his house.That his arrest as a heroin trafficker x x x had been well publicized throughout the world, in various newspapers, particularly in Australia, America, Central Asia and in the Philippines. He was identified in the papers as an international dr

ug trafficker. x x xIn fact, the arrest of defendant and Torabian was likewise on television, not only in the Philippines, but also in America and in Germany. His friends in said places informed him that they saw him on TV with said news.After the arrest made on plaintiff and Torabian, they were brought to Camp Crame handcuffed together, where they were detained for three days without food and water."[1] During the trial, the law firm of Luna, Sison and Manas, filed a special appearance for Scalzo and moved for extension of time to file an answer pending a supposed advice from the United States Department of State and Department of Justice on the defenses to be raised. The trial court granted the motion. On 27 October 1988, Scalzo filed another special appearance to quash the summons on the ground that he, not being a resident of the Philippines and the action being one in personam, was beyond the processes of the court. The motion was denied by the court, in its order of 13 December 1988, holding that the filing by Scalzo of a motion for extension of time to file an answer to the complaint was a voluntary appearance equivalent to service of summons which could likewise be construed a waiver of the requirement of formal notice. Scalzo filed a motion for reconsideration of the court order, contending that a motion for an extension of time to file an answer was not a voluntary appearance equivalent to service of summons since it did not seek an affirmative relief. Scalzo argued that in cases involving the United States government, as well as its agencies and officials, a motion for extension was peculiarly unavoidable due to the need (1) for both the Department of State and the Department of Justice to agree on the defenses to be raised and (2) to refer the case to a Philippine lawyer who would be expected to first review the case. The court a quo denied the motion for reconsideration in its order of 15 October 1989. Scalzo filed a petition for review with the Court of Appeals, there docketed CA-G.R. No. 17023, assailing the denial. In a decision, dated 06 October 1989, the appellate court denied the petition and affirmed the ruling of the trial court. Scalzo then elevated the incident in a petition for review on certiorari, docketed G.R. No. 91173, to this Court. The petition, however, was denied for its failure to comply with SC Circular No. 1-88; in any event, the Court added, Scalzo had failed to show that the appellate court was in error in its questioned judgment. Meanwhile, at the court a quo, an order, dated 09 February 1990, was issued (a) declaring Scalzo in default for his failure to file a responsive pleading (answer) and (b) setting the case for the reception of evidence. On 12 March 1990, Scalzo filed a motion to set aside the order of default and to admit his answer to the complaint. Granting the motion, the trial court set the case for pre-trial. In his answer, Scalzo denied the material allegations of the complaint and raised the affirmative defenses (a) of Minuchers failure to state a cause of action in his complaint and (b) that Scalzo had acted in the discharge of his official duties as being merely an agent of the Drug Enforcement Administration of the United States Department of Justice.Scalzo interposed a counterclaim of P100,000.00 to answer for attorneys' fees and expenses of litigation. Then, on 14 June 1990, after almost two years since the institution of the civil case, Scalzo filed a motion to dismiss the complaint on the ground that, being a special agent of the United States Drug Enforcement Administration, he was entitled to diplomatic immunity. He attached to his motion Diplomatic Note No. 414 of the United States Embassy, dated 29 May 1990, addressed to the Department of Foreign Affairs of the Philippines and a Certification, dated 11 June 1990, of Vice Consul Donna Woodward, certifying that the note is a true and faithful copy of its original. In an order of 25 June 1990, the trial court denied the motion to dismiss. On 27 July 1990, Scalzo filed a petition for certiorari with injunction with this Court, docketed G.R. No. 94257 and entitled "Arthur W. Scalzo, Jr., vs. Hon. Wenceslao Polo, et al.," asking that the complaint in Civil Case No. 88-45691 be ordered dismissed. The case was referred to the Court of Appeals, there docketed CA-G.R. SP No. 22505, per this Courts resolution of 07 August 1990. On 31 October 1990, the Court of Appeals promulgated its decision sustaining the diplomatic immu

nity of Scalzo and ordering the dismissal of the complaint against him.Minucher filed a petition for review with this Court, docketed G.R. No. 97765 and entitled "Khosrow Minucher vs. the Honorable Court of Appeals, et. al. (cited in 214 SCRA 242), appealing the judgment of the Court of Appeals. In a decision, dated 24 September 1992, penned by Justice (now Chief Justice) Hilario Davide, Jr., this Court reversed the decision of the appellate court and remanded the case to the lower court for trial. The remand was ordered on the theses (a) that the Court of Appeals erred in granting the motion to dismiss of Scalzo for lack of jurisdiction over his person without even considering the issue of the authenticity of Diplomatic Note No. 414 and (b) that the complaint contained sufficient allegations to the effect that Scalzo committed the imputed acts in his personal capacity and outside the scope of his official duties and, absent any evidence to the contrary, the issue on Scalzos diplomatic immunity could not be taken up. The Manila RTC thus continued with its hearings on the case. On 17 November 1995, the trial court reached a decision; it adjudged:WHEREFORE, and in view of all the foregoing considerations, judgment is hereby rendered for the plaintiff, who successfully established his claim by sufficient evidence, against the defendant in the manner following:"`Adjudging defendant liable to plaintiff in actual and compensatory damages of P520,000.00; moral damages in the sum of P10 million; exemplary damages in the sum of P100,000.00; attorney's fees in the sum of P200,000.00 plus costs.`The Clerk of the Regional Trial Court, Manila, is ordered to take note of the lien of the Court on this judgment to answer for the unpaid docket fees considering that the plaintiff in this case instituted this action as a pauper litigant."[2] While the trial court gave credence to the claim of Scalzo and the evidence presented by him that he was a diplomatic agent entitled to immunity as such, it ruled that he, nevertheless, should be held accountable for the acts complained of committed outside his official duties. On appeal, the Court of Appeals reversed the decision of the trial court and sustained the defense of Scalzo that he was sufficiently clothed with diplomatic immunity during his term of duty and thereby immune from the criminal and civil jurisdiction of the Receiving State pursuant to the terms of the Vienna Convention. Hence, this recourse by Minucher. The instant petition for review raises a two-fold issue: (1) whether or not the doctrine of conclusiveness of judgment, following the decision rendered by this Court in G.R. No. 97765, should have precluded the Court of Appeals from resolving the appeal to it in an entirely different manner, and (2) whether or not Arthur Scalzo is indeed entitled to diplomatic immunity. The doctrine of conclusiveness of judgment, or its kindred rule of res judicata, would require 1) the finality of the prior judgment, 2) a valid jurisdiction over the subject matter and the parties on the part of the court that renders it, 3) a judgment on the merits, and 4) an identity of the parties, subject matter and causes of action.[3] Even while one of the issues submitted in G.R. No. 97765 - "whether or not public respondent Court of Appeals erred in ruling that private respondent Scalzo is a diplomat immune from civil suit conformably with the Vienna Convention on Diplomatic Relations" - is also a pivotal question raised in the instant petition, the ruling in G.R. No. 97765, however, has not resolved that point with finality. Indeed, the Court there has made this observation -"It may be mentioned in this regard that private respondent himself, in his Pre-trial Brief filed on 13 June 1990, unequivocally states that he would present documentary evidence consisting of DEA records on his investigation and surveillance of plaintiff and on his position and duties as DEA special agent in Manila. Having thus reserved his right to present evidence in support of his position, which is the basis for the alleged diplomatic immunity, the barren self-serving claim in the belated motion to dismiss cannot be relied upon for a reasonable, intelligent and fair resolution of the issue of diplomatic immunity."[4] Scalzo contends that the Vienna Convention on Diplomatic Relations, to which the Philippines is a signatory, grants him absolute immunity from suit, describing his functions as an agent of the United States Drugs Enforcement Agency as co

nducting surveillance operations on suspected drug dealers in the Philippines believed to be the source of prohibited drugs being shipped to the U.S., (and) having ascertained the target, (he then) would inform the Philippine narcotic agents (to) make the actual arrest." Scalzo has submitted to the trial court a number of documents -1. Exh. '2' - Diplomatic Note No. 414 dated 29 May 1990;2. Exh. '1' - Certification of Vice Consul Donna K. Woodward dated 11 June 1990;3. Exh. '5' - Diplomatic Note No. 757 dated 25 October 1991;4. Exh. '6' - Diplomatic Note No. 791 dated 17 November 1992; and5. Exh. '7' - Diplomatic Note No. 833 dated 21 October 1988.6. Exh. '3' - 1st Indorsement of the Hon. Jorge R. Coquia, Legal Adviser, Department of Foreign Affairs, dated 27 June 1990 forwarding Embassy Note No. 414 to the Clerk of Court of RTC Manila, Branch 19 (the trial court);7. Exh. '4' - Diplomatic Note No. 414, appended to the 1st Indorsement (Exh. '3'); and8. Exh. '8' - Letter dated 18 November 1992 from the Office of the Protocol, Department of Foreign Affairs, through Asst. Sec. Emmanuel Fernandez, addressed to the Chief Justice of this Court.[5] The documents, according to Scalzo, would show that: (1) the United States Embassy accordingly advised the Executive Department of the Philippine Government that Scalzo was a member of the diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on 14 October 1985 until his departure on 10 August 1988; (2) that the United States Government was firm from the very beginning in asserting the diplomatic immunity of Scalzo with respect to the case pursuant to the provisions of the Vienna Convention on Diplomatic Relations; and (3) that the United States Embassy repeatedly urged the Department of Foreign Affairs to take appropriate action to inform the trial court of Scalzos diplomatic immunity. The other documentary exhibits were presented to indicate that: (1) the Philippine government itself, through its Executive Department, recognizing and respecting the diplomatic status of Scalzo, formally advised the Judicial Department of his diplomatic status and his entitlement to all diplomatic privileges and immunities under the Vienna Convention; and (2) the Department of Foreign Affairs itself authenticated Diplomatic Note No. 414. Scalzo additionally presented Exhibits "9" to "13" consisting of his reports of investigation on the surveillance and subsequent arrest of Minucher, the certification of the Drug Enforcement Administration of the United States Department of Justice that Scalzo was a special agent assigned to the Philippines at all times relevant to the complaint, and the special power of attorney executed by him in favor of his previous counsel[6] to show (a) that the United States Embassy, affirmed by its Vice Consul, acknowledged Scalzo to be a member of the diplomatic staff of the United States diplomatic mission from his arrival in the Philippines on 14 October 1985 until his departure on 10 August 1988, (b) that, on May 1986, with the cooperation of the Philippine law enforcement officials and in the exercise of his functions as member of the mission, he investigated Minucher for alleged trafficking in a prohibited drug, and (c) that the Philippine Department of Foreign Affairs itself recognized that Scalzo during his tour of duty in the Philippines (14 October 1985 up to 10 August 1988) was listed as being an Assistant Attach of the United States diplomatic mission and accredited with diplomatic status by the Government of the Philippines. In his Exhibit 12, Scalzo described the functions of the overseas office of the United States Drugs Enforcement Agency, i.e., (1) to provide criminal investigative expertise and assistance to foreign law enforcement agencies on narcotic and drug control programs upon the request of the host country, 2) to establish and maintain liaison with the host country and counterpart foreign law enforcement officials, and 3) to conduct complex criminal investigations involving international criminal conspiracies which affect the interests of the United States. The Vienna Convention on Diplomatic Relations was a codification of centuries-old customary law and, by the time of its ratification on 18 April 1961, its rules of law had long become stable. Among the city states of ancient Greece, among the peoples of the Mediterranean before the establishment of the Roman Empire, and among the states of India, the person of the herald in time of war and the pe

rson of the diplomatic envoy in time of peace were universally held sacrosanct.[7] By the end of the 16th century, when the earliest treatises on diplomatic law were published, the inviolability of ambassadors was firmly established as a rule of customary international law.[8] Traditionally, the exercise of diplomatic intercourse among states was undertaken by the head of state himself, as being the preeminent embodiment of the state he represented, and the foreign secretary, the official usually entrusted with the external affairs of the state. Where a state would wish to have a more prominent diplomatic presence in the receiving state, it would then send to the latter a diplomatic mission. Conformably with the Vienna Convention, the functions of the diplomatic mission involve, by and large, the representation of the interests of the sending state and promoting friendly relations with the receiving state.[9] The Convention lists the classes of heads of diplomatic missions to include (a) ambassadors or nuncios accredited to the heads of state,[10] (b) envoys,[11] ministers or internunciosaccredited to the heads of states; and (c) charges d' affairs[12] accredited to the ministers of foreign affairs.[13] Comprising the "staff of the (diplomatic) mission" are the diplomatic staff, the administrative staff and the technical and service staff. Only the heads of missions, as well as members of the diplomatic staff, excluding the members of the administrative, technical and service staff of the mission, are accorded diplomatic rank. Even while the Vienna Convention on Diplomatic Relations provides for immunity to the members of diplomatic missions, it does so, nevertheless, with an understanding that the same be restrictively applied. Only "diplomatic agents," under the terms of the Convention, are vested with blanket diplomatic immunity from civil and criminal suits. The Convention defines "diplomatic agents" as the heads of missions or members of the diplomatic staff, thus impliedly withholding the same privileges from all others. It might bear stressing that even consuls, who represent their respective states in concerns of commerce and navigation and perform certain administrative and notarial duties, such as the issuance of passports and visas, authentication of documents, and administration of oaths, do not ordinarily enjoy the traditional diplomatic immunities and privileges accorded diplomats, mainly for the reason that they are not charged with the duty of representing their states in political matters. Indeed, the main yardstick in ascertaining whether a person is a diplomat entitled to immunity is the determination of whether or not he performs duties of diplomatic nature. Scalzo asserted, particularly in his Exhibits 9 to 13, that he was an Assistant Attach of the United States diplomatic mission and was accredited as such by the Philippine Government.An attach belongs to a category of officers in the diplomatic establishment who may be in charge of its cultural, press, administrative or financial affairs. There could also be a class of attaches belonging to certain ministries or departments of the government, other than the foreign ministry or department, who are detailed by their respective ministries or departments with the embassies such as the military, naval, air, commercial, agricultural, labor, science, and customs attaches, or the like. Attaches assist a chief of mission in his duties and are administratively under him, but their main function is to observe, analyze and interpret trends and developments in their respective fields in the host country and submit reports to their own ministries or departments in the home government.[14] These officials are not generally regarded as members of the diplomatic mission, nor are they normally designated as having diplomatic rank. In an attempt to prove his diplomatic status, Scalzo presented Diplomatic Notes Nos. 414, 757 and 791, all issued post litem motam, respectively, on 29 May 1990, 25 October 1991 and 17 November 1992. The presentation did nothing much to alleviate the Court's initial reservations in G.R. No. 97765, viz:"While the trial court denied the motion to dismiss, the public respondent gravely abused its discretion in dismissing Civil Case No. 88-45691 on the basis of an erroneous assumption that simply because of the diplomatic note, the private respondent is clothed with diplomatic immunity, thereby divesting the trial court of jurisdiction over his person.x x x x x x x x x

And now, to the core issue - the alleged diplomatic immunity of the private respondent. Setting aside for the moment the issue of authenticity raised by the petitioner and the doubts that surround such claim, in view of the fact that it took private respondent one (1) year, eight (8) months and seventeen (17) days from the time his counsel filed on 12 September 1988 a Special Appearance and Motion asking for a first extension of time to file the Answer because the Departments of State and Justice of the United States of America were studying the case for the purpose of determining his defenses, before he could secure the Diplomatic Note from the US Embassy in Manila, and even granting for the sake of argument that such note is authentic, the complaint for damages filed by petitioner cannot be peremptorily dismissed. x x x x x x x x x"There is of course the claim of private respondent that the acts imputed to him were done in his official capacity. Nothing supports this self-serving claim other than the so-called Diplomatic Note. x x x. The public respondent then should have sustained the trial court's denial of the motion to dismiss. Verily, it should have been the most proper and appropriate recourse. It should not have been overwhelmed by the self-serving Diplomatic Note whose belated issuance is even suspect and whose authenticity has not yet been proved. The undue haste with which respondent Court yielded to the private respondent's claim is arbitrary." A significant document would appear to be Exhibit No. 08, dated 08 November 1992, issued by the Office of Protocol of the Department of Foreign Affairs and signed by Emmanuel C. Fernandez, Assistant Secretary, certifying that "the records of the Department (would) show that Mr. Arthur W. Scalzo, Jr., during his term of office in the Philippines (from 14 October 1985 up to 10 August 1988) was listed as an Assistant Attach of the United States diplomatic mission and was, therefore, accredited diplomatic status by the Government of the Philippines." No certified true copy of such "records," the supposed bases for the belated issuance, was presented in evidence. Concededly, vesting a person with diplomatic immunity is a prerogative of the executive branch of the government. In World Health Organization vs. Aquino,[15] the Court has recognized that, in such matters, the hands of the courts are virtually tied. Amidst apprehensions of indiscriminate and incautious grant of immunity, designed to gain exemption from the jurisdiction of courts, it should behoove the Philippine government, specifically its Department of Foreign Affairs, to be most circumspect, that should particularly be no less than compelling, in its post litem motam issuances. It might be recalled that the privilege is not an immunity from the observance of the law of the territorial sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise of territorial jurisdiction.[16] The government of the United States itself, which Scalzo claims to be acting for, has formulated its standards for recognition of a diplomatic agent. The State Department policy is to only concede diplomatic status to a person who possesses an acknowledged diplomatic title and performs duties of diplomatic nature.[17] Supplementary criteria for accreditation are the possession of a valid diplomatic passport or, from States which do not issue such passports, a diplomatic note formally representing the intention to assign the person to diplomatic duties, the holding of a non-immigrant visa, being over twenty-one years of age, and performing diplomatic functions on an essentially full-time basis.[18] Diplomatic missions are requested to provide the most accurate and descriptive job title to that which currently applies to the duties performed. The Office of the Protocol would then assign each individual to the appropriate functional category.[19] But while the diplomatic immunity of Scalzo might thus remain contentious, it was sufficiently established that, indeed, he worked for the United States Drug Enforcement Agency and was tasked to conduct surveillance of suspected drug activities within the country on the dates pertinent to this case. If it should be ascertained that Arthur Scalzo was acting well within his assigned functions when he committed the acts alleged in the complaint, the present controversy could then be resolved under the related doctrine of State Immunity from Suit. The precept that a State cannot be sued in the courts of a foreign state is a long-standing rule of customary international law then closely identified with the

personal immunity of a foreign sovereign from suit[20] and, with the emergence of democratic states, made to attach not just to the person of the head of state, or his representative, but also distinctly to the state itself in its sovereign capacity.[21] If the acts giving rise to a suit are those of a foreign government done by its foreign agent, although not necessarily a diplomatic personage, but acting in his official capacity, the complaint could be barred by the immunity of the foreign sovereign from suit without its consent. Suing a representative of a state is believed to be, in effect, suing the state itself. The proscription is not accorded for the benefit of an individual but for the State, in whose service he is, under the maxim - par in parem, non habet imperium - that all states are sovereign equals and cannot assert jurisdiction over one another.[22] The implication, in broad terms, is that if the judgment against an official would require the state itself to perform an affirmative act to satisfy the award, such as the appropriation of the amount needed to pay the damages decreed against him, the suit must be regarded as being against the state itself, although it has not been formally impleaded.[23] In United States of America vs. Guinto,[24] involving officers of the United States Air Force and special officers of the Air Force Office of Special Investigators charged with the duty of preventing the distribution, possession and use of prohibited drugs, this Court has ruled -"While the doctrine (of state immunity) 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. x x x. It cannot for a moment be imagined that they were acting in their private or unofficial capacity when they apprehended and later testified against the complainant. It follows that for discharging their duties as agents of the United States, they cannot be directly impleaded for acts imputable to their principal, which has not given its consent to be sued. x x x As they have acted on behalf of the government, and within the scope of their authority, it is that government, and not the petitioners personally, [who were] responsible for their acts."[25]This immunity principle, however, has its limitations. Thus, Shauf vs. Court of Appeals[26] elaborates: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 the plaintiff. As was clearly set forth by Justice Zaldivar inDirector of the Bureau of Telecommunications, et al., vs. Aligaen, et al. (33 SCRA 368): `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 for 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. The rationale for this ruling is that the doctrine of state immunity cannot be used as an instrument for perpetrating an injustice. x x x x x x x x x(T)he 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 and jurisdiction.[27] A foreign agent, operating within a territory, can be cloaked with immunity f

rom suit but only as long as it can be established that he is acting within the directives of the sending state.The consent of the host state is an indispensable requirement of basic courtesy between the two sovereigns. Guinto and Shauf both involve officers and personnel of the United States, stationed within Philippine territory, under the RP-US Military Bases Agreement. While evidence is wanting to show any similar agreement between the governments of the Philippines and of the United States (for the latter to send its agents and to conduct surveillance and related activities of suspected drug dealers in the Philippines), the consent or imprimatur of the Philippine government to the activities of the United States Drug Enforcement Agency, however, can be gleaned from the facts heretofore elsewhere mentioned. The official exchanges of communication between agencies of the government of the two countries, certifications from officials of both the Philippine Department of Foreign Affairs and the United States Embassy, as well as the participation of members of the Philippine Narcotics Command in the buy-bust operation conducted at the residence of Minucher at the behest of Scalzo, may be inadequate to support the "diplomatic status" of the latter but they give enough indication that the Philippine government has given its imprimatur, if not consent, to the activities within Philippine territory of agent Scalzo of the United States Drug Enforcement Agency. The job description of Scalzo has tasked him to conduct surveillance on suspected drug suppliers and, after having ascertained the target, to inform local law enforcers who would then be expected to make the arrest. In conducting surveillance activities on Minucher, later acting as the poseur-buyer during the buy-bust operation, and then becoming a principal witness in the criminal case against Minucher, Scalzo hardly can be said to have acted beyond the scope of his official function or duties. All told, this Court is constrained to rule that respondent Arthur Scalzo, an agent of the United States Drug Enforcement Agency allowed by the Philippine government to conduct activities in the country to help contain the problem on the drug traffic, is entitled to the defense of state immunity from suit. WHEREFORE, on the foregoing premises, the petition is DENIED. No costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur

BAYAN MUNA VS. ROMULOMARCH 30, 2013 ~ VBDIAZBayan Muna vs RomuloG. R. No. 159618, February 01, 2011Facts:Petitioner Bayan Muna is a duly registered party-list group established to represent the marginalized sectors of society. Respondent Blas F. Ople, now deceased, was the Secretary of Foreign Affairs during the period material to this case. Respondent Alberto Romulo was impleaded in his capacity as then Executive Secretary.Rome Statute of the International Criminal CourtHaving a key determinative bearing on this case is the Rome Statute establishing the International Criminal Court (ICC) with �the power to exercise its jurisdiction over persons for the most serious crimes of international concern x x x and shall be complementary to the national criminal jurisdictions.� The serious crimes adverted to cover those considered grave under international law, such as genocide, crimes against humanity, war crimes, and crimes of aggression.On December 28, 2000, the RP, through Charge d�Affaires Enrique A. Manalo, signed the Rome Statute which, by its terms, is �subject to ratification, acceptance or approval� by the signatory states. As of the filing of the instant petition, only 92 out of the 139 signatory countries appear to have completed the ratification, approval and concurrence process. The Philippines is not among the 92.RP-US Non-Surrender AgreementOn May 9, 2003, then Ambassador Francis J. Ricciardone sent US Embassy Note No. 0470 to the Department of Foreign Affairs (DFA) proposing the terms of the non-surrender bilateral agreement (Agreement, hereinafter) between the USA and the RP

.Via Exchange of Notes No. BFO-028-037 dated May 13, 2003 (E/N BFO-028-03, hereinafter), the RP, represented by then DFA Secretary Ople, agreed with and accepted the US proposals embodied under the US Embassy Note adverted to and put in effect the Agreement with the US government. In esse, the Agreement aims to protect what it refers to and defines as �persons� of the RP and US from frivolous and harassment suits that might be brought against them in international tribunals.8 It is reflective of the increasing pace of the strategic security and defense partnership between the two countries. As of May 2, 2003, similar bilateral agreements have been effected by and between the US and 33 other countries.The Agreement pertinently provides as follows:1. For purposes of this Agreement, �persons� are current or former Government officials, employees (including contractors), or military personnel or nationals of one Party.2. Persons of one Party present in the territory of the other shall not, absent the express consent of the first Party,(a) be surrendered or transferred by any means to any international tribunal for any purpose, unless such tribunal has been established by the UN Security Council, or(b) be surrendered or transferred by any means to any other entity or third country, or expelled to a third country, for the purpose of surrender to or transfer to any international tribunal, unless such tribunal has been established by the UN Security Council.3. When the [US] extradites, surrenders, or otherwise transfers a person of the Philippines to a third country, the [US] will not agree to the surrender or transfer of that person by the third country to any international tribunal, unless such tribunal has been established by the UN Security Council, absent the express consent of the Government of the Republic of the Philippines [GRP].4. When the [GRP] extradites, surrenders, or otherwise transfers a person of the [USA] to a third country, the [GRP] will not agree to the surrender or transfer of that person by the third country to any international tribunal, unless such tribunal has been established by the UN Security Council, absent the express consent of the Government of the [US].5. This Agreement shall remain in force until one year after the date on which one party notifies the other of its intent to terminate the Agreement. The provisions of this Agreement shall continue to apply with respect to any act occurring, or any allegation arising, before the effective date of termination.In response to a query of then Solicitor General Alfredo L. Benipayo on the status of the non-surrender agreement, Ambassador Ricciardone replied in his letter of October 28, 2003 that the exchange of diplomatic notes constituted a legally binding agreement under international law; and that, under US law, the said agreement did not require the advice and consent of the US Senate.In this proceeding, petitioner imputes grave abuse of discretion to respondents in concluding and ratifying the Agreement and prays that it be struck down as unconstitutional, or at least declared as without force and effect.Issue: Whether or not the RP-US NON SURRENDER AGREEMENT is void ab initio for contracting obligations that are either immoral or otherwise at variance with universally recognized principles of international law.Ruling: The petition is bereft of merit.Validity of the RP-US Non-Surrender AgreementPetitioner�s initial challenge against the Agreement relates to form, its threshold posture being that E/N BFO-028-03 cannot be a valid medium for concluding the Agreement.Petitioners� contention��perhaps taken unaware of certain well-recognized international doctrines, practices, and jargons��is untenable. One of these is the doctrine of incorporation, as expressed in Section 2, Article II of the Constitution, wherein the Philippines adopts the generally accepted principles of international law and international jurisprudence as part of the law of the land and adheres to the policy of peace, cooperation, and amity with all nations. An exchange of notes falls �into the category of inter-governmental agreements,� which is an internationa

lly accepted form of international agreement. The United Nations Treaty Collections (Treaty Reference Guide) defines the term as follows:An �exchange of notes� is a record of a routine agreement, that has many similarities with the private law contract. The agreement consists of the exchange of two documents, each of the parties being in the possession of the one signed by the representative of the other. Under the usual procedure, the accepting State repeats the text of the offering State to record its assent. The signatories of the letters may be government Ministers, diplomats or departmental heads. The technique of exchange of notes is frequently resorted to, either because of its speedy procedure, or, sometimes, to avoid the process of legislative approval.In another perspective, the terms �exchange of notes� and �executive agreements� have been used interchangeably, exchange of notes being considered a form of executive agreement that becomes binding through executive action. On the other hand, executive agreements concluded by the President �sometimes take the form of exchange of notes and at other times that of more formal documents denominated �agreements� or �protocols.�� As former US High Commissioner to the Philippines Francis B. Sayre observed in his work, The Constitutionality of Trade Agreement Acts:The point where ordinary correspondence between this and other governments ends and agreements � whether denominated executive agreements or exchange of notes or otherwise � begin, may sometimes be difficult of ready ascertainment. x x xIt is fairly clear from the foregoing disquisition that E/N BFO-028-03��be it viewed as the Non-Surrender Agreement itself, or as an integral instrument of acceptance thereof or as consent to be bound��is a recognized mode of concluding a legally binding international written contract among nations.Agreement Not Immoral/Not at Variancewith Principles of International LawPetitioner urges that the Agreement be struck down as void ab initio for imposing immoral obligations and/or being at variance with allegedly universally recognized principles of international law. The immoral aspect proceeds from the fact that the Agreement, as petitioner would put it, �leaves criminals immune from responsibility for unimaginable atrocities that deeply shock the conscience of humanity; x x x it precludes our country from delivering an American criminal to the [ICC] x x x.�63The above argument is a kind of recycling of petitioner�s earlier position, which, as already discussed, contends that the RP, by entering into the Agreement, virtually abdicated its sovereignty and in the process undermined its treaty obligations under the Rome Statute, contrary to international law principles.The Court is not persuaded. Suffice it to state in this regard that the non-surrender agreement, as aptly described by the Solicitor General, �is an assertion by the Philippines of its desire to try and punish crimes under its national law. x x x The agreement is a recognition of the primacy and competence of the country�s judiciary to try offenses under its national criminal laws and dispense justice fairly and judiciously.�Petitioner, we believe, labors under the erroneous impression that the Agreement would allow Filipinos and Americans committing high crimes of international concern to escape criminal trial and punishment. This is manifestly incorrect. Persons who may have committed acts penalized under the Rome Statute can be prosecuted and punished in the Philippines or in the US; or with the consent of the RP or the US, before the ICC, assuming, for the nonce, that all the formalities necessary to bind both countries to the Rome Statute have been met. For perspective, what the Agreement contextually prohibits is the surrender by either party of individuals to international tribunals, like the ICC, without the consent of the other party, which may desire to prosecute the crime under its existing laws. With the view we take of things, there is nothing immoral or violative of international law concepts in the act of the Philippines of assuming criminal jurisdiction pursuant to the non-surrender agreement over an offense considered criminal by both Philippine laws and the Rome Statute.

Republic of the PhilippinesSupreme Court

Manila EN BANC  CHINA NATIONAL MACHINERY & EQUIPMENT CORP. (GROUP),Petitioner,  versus  HON. CESAR D. SANTAMARIA, in his official capacity as Presiding Judge of Branch 145, Regional Trial Court of Makati City, HERMINIO HARRY L. ROQUE, JR., JOEL R. BUTUYAN, ROGER R. RAYEL, ROMEL R. BAGARES, CHRISTOPHER FRANCISCO C. BOLASTIG, LEAGUE OF URBAN POOR FOR ACTION (LUPA), KILUSAN NG MARALITA SA MEYCAUAYAN (KMM-LUPA CHAPTER), DANILO M. CALDERON, VICENTE C. ALBAN, MERLYN M. VAAL, LOLITA S. QUINONES, RICARDO D. LANOZO, JR., CONCHITA G. GOZO, MA. TERESA D. ZEPEDA, JOSEFINA A. LANOZO, and SERGIO C. LEGASPI, JR., KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY), EDY CLERIGO, RAMMIL DINGAL, NELSON B. TERRADO, CARMEN DEUNIDA, and EDUARDO LEGSON,Respondents.G.R. No. 185572  Present: CORONA, C.J.,CARPIO,VELASCO, JR.,LEONARDO-DE CASTRO,BRION,PERALTA,BERSAMIN,DEL CASTILLO,ABAD,VILLARAMA, JR.,PEREZ,MENDOZA,SERENO,REYES, andPERLAS-BERNABE, JJ.        Promulgated: February 7, 2012x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O NSERENO, J.:This is a Petition for Review on Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing the 30 September 2008 Decision and 5 December 2008 Resolution of the Court of Appeals (CA) in CAG.R. SP No. 103351.[1]On 14 September 2002, petitioner China National Machinery & Equipment Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin, entered into a Memorandum of Understanding with the North Luzon Railways Corporation (Northrail), repr

esented by its president, Jose L. Cortes, Jr. for the conduct of a feasibility study on a possible railway line from Manila to San Fernando, La Union (the Northrail Project).[2] On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the Department of Finance of the Philippines (DOF) entered into a Memorandum of Understanding (Aug 30 MOU), wherein China agreed to extend Preferential Buyers Credit to the Philippine government to finance the Northrail Project.[3] The Chinese government designated EXIM Bank as the lender, while the Philippine government named the DOF as the borrower.[4] Under the Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-year grace period, and at the rate of 3% per annum.[5]On 1 October 2003, the Chinese Ambassador to the Philippines, Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho (Sec. Camacho) informing him of CNMEGs designation as the Prime Contractor for the Northrail Project.[6]On 30 December 2003, Northrail and CNMEG executed a Contract Agreement for the construction of Section I, Phase I of the North Luzon Railway System from Caloocan to Malolos on a turnkey basis (the Contract Agreement).[7] The contract price for the Northrail Project was pegged at USD 421,050,000.[8] On 26 February 2004, the Philippine government and EXIM Bank entered into a counterpart financial agreement Buyer Credit Loan Agreement No. BLA 04055 (the Loan Agreement).[9] In the Loan Agreement, EXIM Bank agreed to extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor of the Philippine government in order to finance the construction of Phase I of the Northrail Project.[10] On 13 February 2006, respondents filed a Complaint for Annulment of Contract and Injunction with Urgent Motion for Summary Hearing to Determine the Existence of Facts and Circumstances Justifying the Issuance of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO against CNMEG, the Office of the Executive Secretary, the DOF, the Department of Budget and Management, the National Economic Development Authority and Northrail.[11] The case was docketed as Civil Case No. 06-203 before the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the Contract Agreement and the Loan Agreement were void for being contrary to (a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise known as the Government Procurement Reform Act; (c) Presidential Decree No. 1445, otherwise known as the Government Auditing Code; and (d) Executive Order No. 292, otherwise known as the Administrative Code.[12] RTC Br. 145 issued an Order dated 17 March 2006 setting the case for hearing on the issuance of injunctive reliefs.[13] On 29 March 2006, CNMEG filed an Urgent Motion for Reconsideration of this Order.[14] Before RTC Br. 145 could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006, arguing that the trial court did not have jurisdiction over (a) its person, as it was an agent of the Chinese government, making it immune from suit, and (b) the subject matter, as the Northrail Project was a product of an executive agreement.[15] On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs Motion to Dismiss and setting the case for summary hearing to determine whether the injunctive reliefs prayed for should be issued.[16] CNMEG then filed a Motion for Reconsideration,[17] which was denied by the trial court in an Order dated 10 March 2008.[18] Thus, CNMEG filed before the CA a Petition for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction dated 4 April 2008.[19] In the assailed Decision dated 30 September 2008, the appellate court dismissed the Petition for Certiorari.[20] Subsequently, CNMEG filed a Motion for Reconsideration,[21] which was denied by the CA in a Resolution dated 5 December 2008.[22] Thus, CNMEG filed the instant Petition for Review on Certiorari dated 21 January 2009, raising the following issues: [23] Whether or not petitioner CNMEG is an agent of the sovereign Peoples Republic of China.  

Whether or not the Northrail contracts are products of an executive agreement between two sovereign states.   Whether or not the certification from the Department of Foreign Affairs is necessary under the foregoing circumstances.   Whether or not the act being undertaken by petitioner CNMEG is an act jure imperii.   Whether or not the Court of Appeals failed to avoid a procedural limbo in the lower court.     Whether or not the Northrail Project is subject to competitive public bidding.   Whether or not the Court of Appeals ignored the ruling of this Honorable Court in the Neri case.   CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145 for lack of jurisdiction. It likewise requests this Court for the issuance of a TRO and, later on, a writ of preliminary injunction to restrain public respondent from proceeding with the disposition of Civil Case No. 06-203. The crux of this case boils down to two main issues, namely:1.                 Whether CNMEG is entitled to immunity, precluding it from being sued before2.                 Whether the Contract Agreement is an executive agreement, such that it cannor before a local court. First issue: Whether CNMEG is entitled to immunity  This Court explained the doctrine of sovereign immunity in Holy See v. Rosario,[24] to wit: 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. (Emphasis supplied; citations omitted.)   xxx xxx xxx   The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading.     In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed the Philippines adherence to the restrictive theory as follows: The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity of relationships between sovereign states, brought about by their increasing commercial activities, mothered a more restrictive application of the doctrine.    xxx xxx xxx  As it stands now, the application of the doctrine of immunity from suit has

been restricted to sovereign or governmental activities (jure imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts (jure gestionis).[26] (Emphasis supplied.)   Since the Philippines adheres to the restrictive theory, it is crucial to ascertain the legal nature of the act involved whether the entity claiming immunity performs governmental, as opposed to proprietary, functions. As held in United States of America v. Ruiz [27] 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.[28]   A.                CNMEG is engaged in a proprietary activity.  A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary activity. The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:[29] WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos, section I, Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THE PROJECT);   AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including design, manufacturing, supply, construction, commissioning, and training of the Employers personnel;   AND WHEREAS the Loan Agreement of the Preferential Buyers Credit between Export-Import Bank of China and Department of Finance of Republic of the Philippines;   NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.   The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the construction of the Luzon railways was meant to be a proprietary endeavor. In order to fully understand the intention behind and the purpose of the entire undertaking, the Contract Agreement must not be read in isolation. Instead, it must be construed in conjunction with three other documents executed in relation to the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between Northrail and CNMEG;[30] (b) the letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho;[31] and (c) the Loan Agreement.[32]  1.        Memorandum of Understanding dated 14 September 2002   The Memorandum of Understanding dated 14 September 2002 shows that CNMEG sought the construction of the Luzon Railways as a proprietary venture. The relevant parts thereof read: WHEREAS, CNMEG has the financial capability, professional competence and technical expertise to assess the state of the [Main Line North (MLN)] and recommend implementation plans as well as undertake its rehabilitation and/or modernization;   WHEREAS, CNMEG has expressed interest in the rehabilitation and/or modernization of the MLN from Metro Manila to San Fernando, La Union passing through the pro

vinces of Bulacan, Pampanga, Tarlac, Pangasinan and La Union (the Project);   WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to undertake a Feasibility Study (the Study) at no cost to NORTHRAIL CORP.;   WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in undertaking the Project with Suppliers Credit and intends to employ CNMEG as the Contractor for the Project subject to compliance with Philippine and Chinese laws, rules and regulations for the selection of a contractor;   WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal advantageous to the Government of the Republic of the Philippines and has therefore agreed to assist CNMEG in the conduct of the aforesaid Study; xxx xxx xxx   II. APPROVAL PROCESS  2.1              As soon as possible after completion and presentation of the Study in accordaraphs 1.3 and 1.4 above and in compliance with necessary governmental laws, rules, regulations and procedures required from both parties, the parties shall commence the preparation and negotiation of the terms and conditions of the Contract (the Contract) to be entered into between them on the implementation of the Project. The parties shall use their best endeavors to formulate and finalize a Contract with a view to signing the Contract within one hundred twenty (120) days from CNMEGs presentation of the Study.[33] (Emphasis supplied)   Clearly, it was CNMEG that initiated the undertaking, and not the Chinese government. The Feasibility Study was conducted not because of any diplomatic gratuity from or exercise of sovereign functions by the Chinese government, but was plainly a business strategy employed by CNMEG with a view to securing this commercial enterprise.  2.        Letter dated 1 October 2003 That CNMEG, and not the Chinese government, initiated the Northrail Project was confirmed by Amb. Wang in his letter dated 1 October 2003, thus: 1.                  CNMEG has the proven competence and capability to undertake the Proje ranking of 42 given by the ENR among 225 global construction companies.  2.                  CNMEG already signed an MOU with the North Luzon Railways Corporation00 during the visit of Chairman Li Peng. Such being the case, they have already established an initial working relationship with your North Luzon Railways Corporation. This would categorize CNMEG as the state corporation within the Peoples Republic of China which initiated our Governments involvement in the Project.  3.                  Among the various state corporations of the Peoples Republic of Chinaantage of being fully familiar with the current requirements of the Northrail Project having already accomplished a Feasibility Study which was used as inputs by the North Luzon Railways Corporation in the approvals (sic) process required by the Republic of thePhilippines.[34] (Emphasis supplied.)   Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary or regular course of its business as a global construction company. The implementation of the Northrail Project was intended to generate profit for CNMEG, with the Contract Agreement placing a contract price of USD 421,050,000 for the venture.[35] The use of the term state corporation to refer to CNMEG was only descriptive of its nature as a government-owned and/or -controlled corporation, and its assignment as the Primary Contractor did not imply that it was acting on behalf of China in the performance of the latters sovereign functions. To imply otherwise would result in an absurd situation, in which all Chinese corporations owne

d by the state would be automatically considered as performing governmental activities, even if they are clearly engaged in commercial or proprietary pursuits.    3.        The Loan Agreement CNMEG claims immunity on the ground that the Aug 30 MOU on the financing of the Northrail Project was signed by the Philippine and Chinese governments, and its assignment as the Primary Contractor meant that it was bound to perform a governmental function on behalf of China. However, the Loan Agreement, which originated from the same Aug 30 MOU, belies this reasoning, viz: Article 11. xxx (j) Commercial Activity The execution and delivery of this Agreement by the Borrower constitute, and the Borrowers performance of and compliance with its obligations under this Agreement will constitute, private and commercial acts done and performed for commercial purposes under the laws of the Republic of the Philippines and neither the Borrower nor any of its assets is entitled to any immunity or privilege (sovereign or otherwise) from suit, execution or any other legal process with respect to its obligations under this Agreement, as the case may be, in any jurisdiction. Notwithstanding the foregoing, the Borrower does not waive any immunity with respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower and (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use). (Emphasis supplied.)   (k) Proceedings to Enforce Agreement In any proceeding in the Republic of the Philippines to enforce this Agreement, the choice of the laws of the Peoples Republic of China as the governing law hereof will be recognized and such law will be applied. The waiver of immunity by the Borrower, the irrevocable submissions of the Borrower to the non-exclusive jurisdiction of the courts of the Peoples Republic of China and the appointment of the Borrowers Chinese Process Agent is legal, valid, binding and enforceable and any judgment obtained in the Peoples Republic of China will be if introduced, evidence for enforcement in any proceedings against the Borrower and its assets in the Republic of the Philippines provided that (a) the court rendering judgment had jurisdiction over the subject matter of the action in accordance with its jurisdictional rules, (b) the Republic had notice of the proceedings, (c) the judgment of the court was not obtained through collusion or fraud, and (d) such judgment was not based on a clear mistake of fact or law.[36]   Further, the Loan Agreement likewise contains this express waiver of immunity: 15.5 Waiver of Immunity The Borrower irrevocably and unconditionally waives, any immunity to which it or its property may at any time be or become entitled, whether characterized as sovereign immunity or otherwise, from any suit, judgment, service of process upon it or any agent, execution on judgment, set-off, attachment prior to judgment, attachment in aid of execution to which it or its assets may be entitled in any legal action or proceedings with respect to this Agreement or any of the transactions contemplated hereby or hereunder. Notwithstanding the foregoing, the Borrower does not waive any immunity in respect of its assets which are (i) used by a diplomatic or consular mission of the Borrower, (ii) assets of a military character and under control of a military authority or defense agency and (iii) located in the Philippines and dedicated to a public or governmental use (as distinguished from patrimonial assets or assets dedicated to commercial use).[37]   Thus, despite petitioners claim that the EXIM Bank extended financial assistance to Northrail because the bank was mandated by the Chinese government, and not because of any motivation to do business in the Philippines,[38] it is clear from the foregoing provisions that the Northrail Project was a purely commercial

transaction. Admittedly, the Loan Agreement was entered into between EXIM Bank and the Philippine government, while the Contract Agreement was between Northrail and CNMEG. Although the Contract Agreement is silent on the classification of the legal nature of the transaction, the foregoing provisions of the Loan Agreement, which is an inextricable part of the entire undertaking, nonetheless reveal the intention of the parties to the Northrail Project to classify the whole venture as commercial or proprietary in character. Thus, piecing together the content and tenor of the Contract Agreement, the Memorandum of Understanding dated 14 September 2002, Amb. Wangs letter dated 1 October 2003, and the Loan Agreement would reveal the desire of CNMEG to construct the Luzon Railways in pursuit of a purely commercial activity performed in the ordinary course of its business.  B.                CNMEG failed to adduce evidence that it is immune from suit under Chinese la  Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. This view finds support in Malong v. Philippine National Railways, in which this Court held that (i)mmunity from suit is determined by the character of the objects for which the entity was organized.[39] In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische Zusammenarbeit (GTZ) v. CA[40] must be examined. In Deutsche Gesellschaft, Germany and thePhilippines entered into a Technical Cooperation Agreement, pursuant to which both signed an arrangement promoting the Social Health InsuranceNetworking and Empowerment (SHINE) project. The two governments named their respective implementing organizations: the Department of Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for the Philippines, and GTZ for the implementation of Germanys contributions. In ruling that GTZ was not immune from suit, this Court held: The arguments raised by GTZ and the [Office of the Solicitor General (OSG)] are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. The activities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in the Philippines. The fact that GTZ entered into employment contracts with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr., which set forth what remains valid doctrine:   Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the foreign state is engaged in the activity in the regular course of business. If the foreign state is not engaged regularly in a business or trade, 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, especially when it is not undertaken for gain or profit.   Beyond dispute is the tenability of the comment points (sic) raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particular employment contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy the Federal Republics immunity from suit?   The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that the State may not be sued without its consent. Who or what consists of the State? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State, necessary as it is to avoid

unduly vexing the peace of nations.   If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality of GTZ. Counsel for GTZ characterizes GTZ as the implementing agency of the Government of the Federal Republic of Germany, a depiction similarly adopted by the OSG. Assuming that the characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated. xxx xxx xxx   State immunity from suit may be waived by general or special law. The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued.  xxx xxx xxx   It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which grants the corporation the power to sue and be sued in court. Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, (sic) governmental in nature as (sic) they may be.   Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is the implementing agency of the Government of the Federal Republic of Germany. On the other hand, private respondents asserted before the Labor Arbiter that GTZ was a private corporation engaged in the implementation of development projects. The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss, though he was silent on that point in his Decision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation was never controverted, and is therefore deemed admitted. In its Reply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the implementing agency, and not that of a private corporation.   In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a private corporation, and the Labor Arbiter acted rashly in accepting such claim without explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare descriptive implementing agency. There is no doubt that the 1991 Agreement designated GTZ as the implementing agency in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as implementing agency could take us. The term by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridical personality independent of the German government or none at all. xxx xxx xxx 

Again, we are uncertain of the corresponding legal implications under German law surrounding a private company owned by the Federal Republic of Germany. Yet taking the description on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government, or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the Corporate Code states that [e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name.   It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines, and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit.[41] (Emphasis supplied.)   Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit, even if it contends that it performs governmental functions. Its designation as the Primary Contractor does not automatically grant it immunity, just as the term implementing agency has no precise definition for purposes of ascertaining whether GTZ was immune from suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code.  C.               CNMEG failed to present a certification from the Department of Foreign Affair  In Holy See,[42] this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question conclusive upon the courts, to wit: In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. xxx xxx xxx   In the Philippines, the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment, informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at Olongapo City, Zambales, a suggestion to respondent Judge. The Solicitor General embodied the suggestion in a Manifestation and Memorandum as amicu

s curiae.   In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to file its memorandum in support of petitioners claim of sovereign immunity.   In some cases, the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office, the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved.[43] (Emphasis supplied.)   The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which may be considered as conclusive upon the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor Relations Commission (NLRC),[44] emphasized the DFAs competence and authority to provide such necessary determination, to wit: The DFAs function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenge, (sic) entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. When international agreements are concluded, the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. In our country, this task falls principally of (sic) the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena.[45] (Emphasis supplied.)   Further, the fact that this authority is exclusive to the DFA was also emphasized in this Courts ruling in Deutsche Gesellschaft: It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs a certification of respondents diplomatic status and entitlement to diplomatic privileges including immunity from suits. The requirement might not necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immune which the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes of this case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture,we do not see any evidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZs claim of immunity. It may be possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have discussed herein.   Would the fact that the Solicitor General has endorsed GTZs claim of States immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in public international law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZs claim, or that the OSG had solicited the DFAs views on the issue. The arguments raised by the OSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippi

ne government on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited.[46] (Emphasis supplied.)   In the case at bar, CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of the Peoples Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity.[47] Surely, this is not the kind of certification that can establish CNMEGs entitlement to immunity from suit, as Holy Seeunequivocally refers to the determination of the Foreign Office of the state where it is sued. Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, as expressly enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification. D.                An agreement to submit any dispute to arbitration may be construed as an impmunity from suit.  In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning behind the waiver in this case. The Conditions of Contract,[48] which is an integral part of the Contract Agreement,[49] states: 33. SETTLEMENT OF DISPUTES AND ARBITRATION   33.1. Amicable Settlement   Both parties shall attempt to amicably settle all disputes or controversies arising from this Contract before the commencement of arbitration.   33.2. Arbitration   All disputes or controversies arising from this Contract which cannot be settled between the Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRAL Arbitration Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall be Hong Kong International Arbitration Center. The place of arbitration shall be in Hong Kong at Hong Kong International Arbitration Center (HKIAC).   Under the above provisions, if any dispute arises between Northrail and CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13 thereof provides for the Recognition and Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules, the party to arbitration wishing to have an arbitral award recognized and enforced in the Philippines must petition the proper regional trial court (a) where the assets to be attached or levied upon is located; (b) where the acts to be enjoined are being performed; (c) in the principal place of business in the Philippines of any of the parties; (d) if any of the parties is an individual, where any of those individuals resides; or (e) in the National Capital Judicial Region. From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the Contract Agreement.

 Second issue: Whether the Contract Agreement is an executive agreement  Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty as follows: [A]n international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.   In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.[50] Despite these differences, to be considered an executive agreement, the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written; and (c) it must governed by international law. The first and the third requisites do not obtain in the case at bar. A.                CNMEG is neither a government nor a government agency.  The Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG.[51] By the terms of the Contract Agreement, Northrail is a government-owned or -controlled corporation, while CNMEG is a corporation duly organized and created under the laws of the Peoples Republic of China.[52] Thus, both Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively. Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact that Amb. Wang, in his letter dated 1 October 2003,[53]described CNMEG as a state corporation and declared its designation as the Primary Contractor in the Northrail Project did not mean it was to perform sovereign functions on behalf of China. That label was only descriptive of its nature as a state-owned corporation, and did not preclude it from engaging in purely commercial or proprietary ventures. B.                The Contract Agreement is to be governed by Philippine law.  Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the Contract Agreement is an integral part of the latter, states: APPLICABLE LAW AND GOVERNING LANGUAGE   The contract shall in all respects be read and construed in accordance with the laws of the Philippines.   The contract shall be written in English language. All correspondence and other documents pertaining to the Contract which are exchanged by the parties shall be written in English language.   Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations thereunder are not governed by international law. It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an executive agreement. It is merely an ordinary commercial contract that can be questioned before the local courts. WHEREFORE, the instant Petition is DENIED. Petitioner China National Machinery & Equipment Corp. (Group) is not entitled to immunity from suit, and the Contract Agreement is not an executive agreement. CNMEGs prayer for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for being moot and academic. This case isREMANDED to the Regional Trial Court of Makati, Branch 145, for further proceeding

s as regards the validity of the contracts subject of Civil Case No. 06-203. No pronouncement on costs of suit.SO ORDERED.

History of the dispute (paras. 15-25)The Court recalls that the present case arose out of the signature, on 16 September 1977, by the Hungarian People's Republic and the Czechoslovak People's Republic, of a treaty "concerning the construction and operation of the Gabc?kovo-Nagymaros System of Locks" (hereinafter called the "1977 Treaty"). The names of the two contracting States have varied over the years; they are referred to as Hungary and Czechoslovakia. The 1977 Treaty entered into force on 30 June 1978. It provides for the construction and operation of a System of Locks by the parties as a "joint investment". According to its Preamble, the system was designed to attain "the broad utilization of the natural resources of the Bratislava-Budapest section of the Danube river for the development of water resources, energy, transport, agriculture and other sectors of the national economy of the Contracting Parties". The joint investment was thus essentially aimed at the production of hydroelectricity, the improvement of navigation on the relevant section of the Danube and the protection of the areas along the banks against flooding. At the same time, by the terms of the Treaty, the contracting parties undertook to ensure that the quality of water in the Danube was not impaired as a result of the Project, and that compliance with the obligations for the protection of nature arising in connection with the construction and operation of the System of Locks would be observed.The sector of the Danube river with which this case is concerned is a stretch of approximately 200 kilometres, between Bratislava in Slovakia and Budapest in Hungary. Below Bratislava, the river gradient decreases markedly, creating an alluvial plain of gravel and sand sediment. The boundary between the two States is constituted, in the major part of that region, by the main channel of the river. Cunovo and, further downstream, Gabc?kovo, are situated in this sector of the river on Slovak territory, Cunovo on the right bank and Gabc?kovo on the left. Further downstream, after the confluence of the various branches, the river enters Hungarian territory. Nagymaros lies in a narrow valley at a bend in the Danube just before it turns south, enclosing the large river island of Szentendre before reaching Budapest (see sketch-map No. 1 (85 Kb) ).The 1977 Treaty describes the principal works to be constructed in pursuance of the Project. It provided for the building of two series of locks, one at Gabc?kovo (in Czechoslovak territory) and the other at Nagymaros (in Hungarian territory), to constitute "a single and indivisible operational system of works" (see sketch-map No. 2, (85 Kb) ). The Treaty further provided that the technical specifications concerning the system would be included in the "Joint Contractual Plan" which was to be drawn up in accordance with the Agreement signed by the two Governments for this purpose on 6 May 1976. It also provided for the construction, financing and management of the works on a joint basis in which the Parties participated in equal measure.The Joint Contractual Plan, set forth, on a large number of points, both the objectives of the system and the characteristics of the works. It also contained "Preliminary Operating and Maintenance Rules", Article 23 of which specified that "The final operating rules [should] be approved within a year of the setting into operation of the system."The Court observes that the Project was thus to have taken the form of an integrated joint project with the two contracting parties on an equal footing in respect of the financing, construction and operation of the works. Its single and indivisible nature was to have been realized through the Joint Contractual Plan which complemented the Treaty. In particular, Hungary would have had control of the sluices at Dunakiliti and the works at Nagymaros, whereas Czechoslovakia would have had control of the works at Gabc?kovo.*The schedule of work had for its part been fixed in an Agreement on mutual assistance signed by the two parties on 16 September 1977, at the same time as the Tr

eaty itself. The Agreement made some adjustments to the allocation of the works between the parties as laid down by the Treaty. Work on the Project started in 1978. On Hungary's initiative, the two parties first agreed, by two Protocols signed on 10 October 1983 to slow the work down and to postpone putting into operation the power plants, and then, by a Protocol signed on 6 February 1989 to accelerate the Project.As a result of intense criticism which the Project had generated in Hungary, the Hungarian Government decided on 13 May 1989 to suspend the works at Nagymaros pending the completion of various studies which the competent authorities were to finish before 31 July 1989. On 21 July 1989, the Hungarian Government extended the suspension of the works at Nagymaros until 31 October 1989, and, in addition, suspended the works at Dunakiliti until the same date. Lastly, on 27 October 1989, Hungary decided to abandon the works at Nagymaros and to maintain the status quo at Dunakiliti.During this period, negotiations took place between the parties. Czechoslovakia also started investigating alternative solutions. One of them, an alternative solution subsequently known as "Variant C", entailed a unilateral diversion of the Danube by Czechoslovakia on its territory some 10 kilometres upstream of Dunakiliti (see sketch-map No. 3, (90 Kb) ). In its final stage, Variant C included the construction at Cunovo of an overflow dam and a levee linking that dam to the south bank of the bypass canal. Provision was made for ancillary works.On 23 July 1991, the Slovak Government decided "to begin, in September 1991, construction to put the Gabc?kovo Project into operation by the provisional solution". Work on Variant C began in November 1991. Discussions continued between the two parties but to no avail, and, on 19 May 1992, the Hungarian Government transmitted to the Czechoslovak Government a Note Verbale terminating the 1977 Treaty with effect from 25 May 1992. On 15 October 1992, Czechoslovakia began work to enable the Danube to be closed and, starting on 23 October, proceeded to the damming of the river.The Court finally takes note of the fact that on 1 January 1993 Slovakia became an independent State; that in the Special Agreement thereafter concluded between Hungary and Slovakia the Parties agreed to establish and implement a temporary water management r?gime for the Danube; and that finally they concluded an Agreement in respect of it on 19 April 1995, which would come to an end 14 days after the Judgment of the Court. The Court also observes that not only the 1977 Treaty, but also the "related instruments" are covered in the preamble to the Special Agreement and that the Parties, when concentrating their reasoning on the 1977 Treaty, appear to have extended their arguments to the "related instruments".Suspension and abandonment by Hungary, in 1989, of works on the Project (paras. 27-59)In terms of Article 2, paragraph 1 (a), of the Special Agreement, the Court is requested to decide first"whether the Republic of Hungary was entitled to suspend and subsequently abandon, in 1989, the works on the Nagymaros Project and on the part of the Gabc?kovo Project for which the Treaty attributed responsibility to the Republic of Hungary".The Court observes that it has no need to dwell upon the question of the applicability or non-applicability in the present case of the Vienna Convention of 1969 on the Law of Treaties, as argued by the Parties. It needs only to be mindful of the fact that it has several times had occasion to hold that some of the rules laid down in that Convention might be considered as a codification of existing customary law. The Court takes the view that in many respects this applies to the provisions of the Vienna Convention concerning the termination and the suspension of the operation of treaties, set forth in Articles 60 to 62. Neither has the Court lost sight of the fact that the Vienna Convention is in any event applicable to the Protocol of 6 February 1989 whereby Hungary and Czechoslovakia agreed to accelerate completion of the works relating to the Gabc?kovo-Nagymaros Project.Nor does the Court need to dwell upon the question of the relationship between the law of treaties and the law of State responsibility, to which the Parties dev

oted lengthy arguments, as those two branches of international law obviously have a scope that is distinct. A determination of whether a convention is or is not in force, and whether it has or has not been properly suspended or denounced, is to be made pursuant to the law of treaties. On the other hand, an evaluation of the extent to which the suspension or denunciation of a convention, seen as incompatible with the law of treaties, involves the responsibility of the State which proceeded to it, is to be made under the law of State responsibility.The Court cannot accept Hungary's argument to the effect that, in 1989, in suspending and subsequently abandoning the works for which it was still responsible at Nagymaros and at Dunakiliti, it did not suspend the application of the 1977 Treaty itself or then reject that Treaty. The conduct of Hungary at that time can only be interpreted as an expression of its unwillingness to comply with at least some of the provisions of the Treaty and the Protocol of 6 February 1989, as specified in the Joint Contractual Plan. The effect of Hungary's conduct was to render impossible the accomplishment of the system of works that the Treaty expressly described as "single and indivisible".The Court then considers the question of whether there was, in 1989, a state of necessity which would have permitted Hungary, without incurring international responsibility, to suspend and abandon works that it was committed to perform in accordance with the 1977 Treaty and related instruments.The Court observes, first of all, that the state of necessity is a ground recognized by customary international law for precluding the wrongfulness of an act not in conformity with an international obligation. It considers moreover that such ground for precluding wrongfulness can only be accepted on an exceptional basis. The following basic conditions set forth in Article 33 of the Draft Article on the International Responsibility of States by the International Law Commission are relevant in the present case: it must have been occasioned by an "essential interest" of the State which is the author of the act conflicting with one of its international obligations; that interest must have been threatened by a "grave and imminent peril"; the act being challenged must have been the "only means" of safeguarding that interest; that act must not have "seriously impair[ed] an essential interest" of the State towards which the obligation existed; and the State which is the author of that act must not have "contributed to the occurrence of the state of necessity". Those conditions reflect customary international law.The Court has no difficulty in acknowledging that the concerns expressed by Hungary for its natural environment in the region affected by the Gabc?kovo-Nagymaros Project related to an "essential interest" of that State.It is of the view, however, that, with respect to both Nagymaros and Gabc?kovo, the perils invoked by Hungary, without prejudging their possible gravity, were not sufficiently established in 1989, nor were they "imminent"; and that Hungary had available to it at that time means of responding to these perceived perils other than the suspension and abandonment of works with which it had been entrusted. What is more, negotiations were under way which might have led to a review of the Project and the extension of some of its time-limits, without there being need to abandon it.The Court further notes that Hungary when it decided to conclude the 1977 Treaty, was presumably aware of the situation as then known; and that the need to ensure the protection of the environment had not escaped the parties. Neither can it fail to note the positions taken by Hungary after the entry into force of the 1977 Treaty. Slowly, speeded up. The Court infers that, in the present case, even if it had been established that there was, in 1989, a state of necessity linked to the performance of the 1977 Treaty, Hungary would not have been permitted to rely upon that state of necessity in order to justify its failure to comply with its treaty obligations, as it had helped, by act or omission to bring it about.In the light of the conclusions reached above, the Court finds that Hungary was not entitled to suspend and subsequently abandon, in 1989, the works on the Nagymaros Project and on the part of the Gabc?kovo Project for which the 1977 Treaty and related instruments attributed responsibility to it.

Czechoslovakia's proceeding, in November 1991, to "Variant C" and putting into operation, from October 1992, this Variant (paras. 60-88)By the terms of Article 2, paragraph 1 (b), of the Special Agreement, the Court is asked in the second place to decide"(b)whether the Czech and Slovak Federal Republic was entitled to proceed, in November 1991, to the 'provisional solution' and to put into operation from October 1992 this system".Czechoslovakia had maintained that proceeding to Variant C and putting it into operation did not constitute internationally wrongful acts; Slovakia adopted this argument. During the proceedings before the Court Slovakia contended that Hungary's decision to suspend and subsequently abandon the construction of works at Dunakiliti had made it impossible for Czechoslovakia to carry out the works as initially contemplated by the 1977 Treaty and that the latter was therefore entitled to proceed with a solution which was as close to the original Project as possible. Slovakia invoked what it described as a "principle of approximate application" to justify the construction and operation of Variant c. It explained that this was the only possibility remaining to it "of fulfilling not only the purposes of the 1977 Treaty, but the continuing obligation to implement it in good faith".The Court observes that it is not necessary to determine whether there is a principle of international law or a general principle of law of "approximate application" because, even if such a principle existed, it could by definition only be employed within the limits of the treaty in question. In the view of the Court, Variant C does not meet that cardinal condition with regard to the 1977 Treaty.As the Court has already observed, the basic characteristic of the 1977 Treaty is, according to Article 1, to provide for the construction of the Gabc?kovo-Nagymaros System of Locks as a joint investment constituting a single and indivisible operational system of works. This element is equally reflected in Articles 8 and 10 of the Treaty providing for joint ownership of the most important works of the Gabc?kovo-Nagymaros project and for the operation of this joint property as a co-ordinated single unit. By definition all this could not be carried out by unilateral action. In spite of having a certain external physical similarity with the original Project, Variant C thus differed sharply from it in its legal characteristics. The Court accordingly concludes that Czechoslovakia, in putting Variant C into operation, was not applying the 1977 Treaty but, on the contrary, violated certain of its express provisions, and, in so doing, committed an internationally wrongful act.The Court notes that between November 1991 and October 1992, Czechoslovakia confined itself to the execution, on its own territory, of the works which were necessary for the implementation of Variant C, but which could have been abandoned if an agreement had been reached between the parties and did not therefore predetermine the final decision to be taken. For as long as the Danube had not been unilaterally dammed, Variant C had not in fact been applied. Such a situation is not unusual in international law or, for that matter, in domestic law. A wrongful act or offence is frequently preceded by preparatory actions which are not to be confused with the act or offence itself. It is as well to distinguish between the actual commission of a wrongful act (whether instantaneous or continuous) and the conduct prior to that act which is of a preparatory character and which "does not qualify as a wrongful act".Slovakia also maintained that it was acting under a duty to mitigate damages when it carried out Variant c. It stated that "It is a general principle of international law that a party injured by the non-performance of another contract party must seek to mitigate the damage he has sustained." But the Court observes that, while this principle might thus provide a basis for the calculation of damages, it could not, on the other hand, justify an otherwise wrongful act. The Court further considers that the diversion of the Danube carried out by Czechoslovakia was not a lawful countermeasure because it was not proportionate.In the light of the conclusions reached above, the Court finds that Czechoslovakia was entitled to proceed, in November 1991, to Variant C in so far as it then confined itself to undertaking works which did not predetermine the final decisi

on to be taken by it. On the other hand, Czechoslovakia was not entitled to put that Variant into operation from October 1992.Notification by Hungary, on 19 May 1992, of the termination of the 1977 Treaty and related instruments (paras. 89-115)By the terms of Article 2, paragraph 1 (c), of the Special Agreement, the Court is asked, thirdly, to determine"what are the legal effects of the notification, on 19 May 1992, of the termination of the Treaty by the Republic of Hungary".During the proceedings, Hungary presented five arguments in support of the lawfulness, and thus the effectiveness, of its notification of termination. These were the existence of a state of necessity; the impossibility of performance of the Treaty; the occurrence of a fundamental change of circumstances; the material breach of the Treaty by Czechoslovakia; and, finally, the development of new norms of international environmental law. Slovakia contested each of these grounds.? State of necessityThe Court observes that, even if a state of necessity is found to exist, it is not a ground for the termination of a treaty. It may only be invoked to exonerate from its responsibility a State which has failed to implement a treaty.? Impossibility of performanceThe Court finds that it is not necessary to determine whether the term "object" in Article 61 of the Vienna Convention of 1969 on the Law of Treaties (which speaks of "permanent disappearance or destruction of an object indispensable for the execution of the treaty" as a ground for terminating or withdrawing from it) can also be understood to embrace a legal r?gime as in any event, even if that were the case, it would have to conclude that in this instance that r?gime had not definitively ceased to exist. The 1977 Treaty ? and in particular its Articles 15, 19 and 20 ? actually made available to the parties the necessary means to proceed at any time, by negotiation, to the required readjustments between economic imperatives and ecological imperatives.? Fundamental change of circumstancesIn the Court's view, the prevalent political conditions were not so closely linked to the object and purpose of the Treaty that they constituted an essential basis of the consent of the parties and, in changing, radically altered the extent of the obligations still to be performed. The same holds good for the economic system in force at the time of the conclusion of the 1977 Treaty. Nor does the Court consider that new developments in the state of environmental knowledge and of environmental law can be said to have been completely unforeseen. What is more, the formulation of Articles 15, 19 and 20 is designed to accommodate change. The changed circumstances advanced by Hungary are thus, in the Court's view, not of such a nature, either individually or collectively, that their effect would radically transform the extent of the obligations still to be performed in order to accomplish the Project.? Material breach of the TreatyHungary's main argument for invoking a material breach of the Treaty was the construction and putting into operation of Variant c. The Court pointed out that it had already found that Czechoslovakia violated the Treaty only when it diverted the waters of the Danube into the bypass canal in October 1992. In constructing the works which would lead to the putting into operation of Variant C, Czechoslovakia did not act unlawfully. In the Court's view, therefore, the notification of termination by Hungary on 19 May 1992 was premature. No breach of the Treaty by Czechoslovakia had yet taken place and consequently Hungary was not entitled to invoke any such breach of the Treaty as a ground for terminating it when it did.? Development of new norms of international environmental lawThe Court notes that neither of the Parties contended that new peremptory norms of environmental law had emerged since the conclusion of the 1977 Treaty; and the Court will consequently not be required to examine the scope of Article 64 of the Vienna Convention on the Law of Treaties (which treats of the voidance and termination of a treaty because of the emergence of a new peremptory norm of general international law (jus cogens)). On the other hand, the Court wishes to point

out that newly developed norms of environmental law are relevant for the implementation of the Treaty and that the parties could, by agreement, incorporate them through the application of Articles 15, 19 and 20 of the Treaty. These articles do not contain specific obligations of performance but require the parties, in carrying out their obligations to ensure that the quality of water in the Danube is not impaired and that nature is protected, to take new environmental norms into consideration when agreeing upon the means to be specified in the Joint Contractual Plan. By inserting these evolving provisions in the Treaty, the parties recognized the potential necessity to adapt the Project. Consequently, the Treaty is not static, and is open to adapt to emerging norms of international law. By means of Articles 15 and 19, new environmental norms can be incorporated in the Joint Contractual Plan. The awareness of the vulnerability of the environment and the recognition that environmental risks have to be assessed on a continuous basis have become much stronger in the years since the Treaty's conclusion. These new concerns have enhanced the relevance of Articles 15, 19 and 20. The Court recognizes that both Parties agree on the need to take environmental concerns seriously and to take the required precautionary measures, but they fundamentally disagree on the consequences this has for the joint Project. In such a case, third-party involvement may be helpful and instrumental in finding a solution, provided each of the Parties is flexible in its position.Finally, the Court is of the view that although it has found that both Hungary and Czechoslovakia failed to comply with their obligations under the 1977 Treaty, this reciprocal wrongful conduct did not bring the Treaty to an end nor justify its termination.In the light of the conclusions it has reached above, the Court finds that the notification of termination by Hungary of 19 May 1992 did not have the legal effect of terminating the 1977 Treaty and related instruments.Dissolution of Czechoslovakia (paras. 117-124)The Court then turns to the question whether Slovakia became a party to the 1977 Treaty as successor to Czechoslovakia. As an alternative argument, Hungary contended that, even if the Treaty survived the notification of termination, in any event it ceased to be in force as a treaty on 31 December 1992, as a result of the "disappearance of one of the parties" On that date Czechoslovakia ceased to exist as a legal entity, and on 1 January 1993 the Czech Republic and the Slovak Republic came into existence.The Court does not find it necessary for the purposes of the present case to enter into a discussion of whether or not Article 34 of the 1978 Vienna Convention on Succession of States in respect of treaties (in which a rule of automatic succession to all treaties is provided for) reflects the state of customary international law. More relevant to its present analysis is the particular nature and character of the 1977 Treaty. An examination of this Treaty confirms that, aside from its undoubted nature as a joint investment, its major elements were the proposed construction and joint operation of a large, integrated and indivisible complex of structures and installations on specific parts of the respective territories of Hungary and Czechoslovakia along the Danube. The Treaty also established the navigational r?gime for an important sector of an international waterway, in particular the relocation of the main international shipping lane to the bypass canal. In so doing, it inescapably created a situation in which the interests of other users of the Danube were affected. Furthermore, the interests of third States were expressly acknowledged in Article 18, whereby the parties undertook to ensure "uninterrupted and safe navigation on the international fairway" in accordance with their obligations under the Convention of 18 August 1948 concerning the R?gime of Navigation on the Danube.The Court then refers to Article 12 of the 1978 Vienna Convention on Succession of States in respect of Treaties, which reflects the principle that treaties of a territorial character have been regarded both in traditional doctrine and in modern opinion as unaffected by a succession of States. The Court considers that Article 12 reflects a rule of customary international law; and notes that neither of the Parties disputed this. It concludes that the content of the 1977 Treaty indicates that it must be regarded as establishing a territorial r?gime within

the meaning of Article 12 of 1978 Vienna Convention. It created rights and obligations "attaching to" the parts of the Danube to which it relates; thus the Treaty itself could not be affected by a succession of States. The Court therefore concludes that the 1977 Treaty became binding upon Slovakia on 1 January 1993.Legal consequences of the Judgment (paras. 125-154)The Court observes that the part of its Judgment which answers the questions in Article 2, paragraph 1, of the Special Agreement has a declaratory character. It deals with the past conduct of the Parties and determines the lawfulness or unlawfulness of that conduct between 1989 and 1992 as well as its effects on the existence of the Treaty. Now the Court has, on the basis of the foregoing findings, to determine what the future conduct of the Parties should be. This part of the Judgment is prescriptive rather than declaratory because it determines what the rights and obligations of the Parties are. The Parties will have to seek agreement on the modalities of the execution of the Judgment in the light of this determination, as they agreed to do in Article 5 of the Special Agreement.In this regard it is of cardinal importance that the Court has found that the 1977 Treaty is still in force and consequently governs the relationship between the Parties. That relationship is also determined by the rules of other relevant conventions to which the two States are party, by the rules of general international law and, in this particular case, by the rules of State responsibility; but it is governed, above all, by the applicable rules of the 1977 Treaty as a lex specialis. The Court observes that it cannot, however, disregard the fact that the Treaty has not been fully implemented by either party for years, and indeed that their acts of commission and omission have contributed to creating the factual situation that now exists. Nor can it overlook that factual situation ? or the practical possibilities and impossibilities to which it gives rise ? when deciding on the legal requirements for the future conduct of the Parties. What is essential, therefore, is that the factual situation as it has developed since 1989 shall be placed within the context of the preserved and developing treaty relationship, in order to achieve its object and purpose in so far as that is feasible. For it is only then that the irregular state of affairs which exists as the result of the failure of both Parties to comply with their treaty obligations can be remedied.The Court points out that the 1977 Treaty is not only a joint investment project for the production of energy, but it was designed to serve other objectives as well: the improvement of the navigability of the Danube, flood control and regulation of ice-discharge, and the protection of the natural environment. In order to achieve these objectives the parties accepted obligations of conduct, obligations of performance, and obligations of result. The Court is of the opinion that the Parties are under a legal obligation, during the negotiations to be held by virtue of Article 5 of the Special Agreement, to consider, within the context of the 1977 Treaty, in what way the multiple objectives of the Treaty can best be served, keeping in mind that all of them should be fulfilled.It is clear that the Project's impact upon, and its implications for, the environment are of necessity a key issue. In order to evaluate the environmental risks, current standards must be taken into consideration. This is not only allowed by the wording of Articles 15 and 19, but even prescribed, to the extent that these articles impose a continuing ? and thus necessarily evolving ? obligation on the parties to maintain the quality of the water of the Danube and to protect nature. The Court is mindful that, in the field of environmental protection, vigilance and prevention are required on account of the often irreversible character of damage to the environment and of the limitations inherent in the very mechanism of reparation of this type of damage. New norms and standards have been developed, set forth in a great number of instruments during the last two decades. Such new norms have to be taken into consideration, and such new standards given proper weight, not only when States contemplate new activities but also when continuing with activities begun in the past. For the purposes of the present case, this means that the Parties together should look afresh at the effects on the environment of the operation of the Gabc?kovo power plant. In particular they must find a satisfactory solution for the volume of water to be released into the ol

d bed of the Danube and into the side-arms on both sides of the river.What is required in the present case by the rule pacta sunt servanda, as reflected in Article 26 of the Vienna Convention of 1969 on the Law of Treaties, is that the Parties find an agreed solution within the co-operative context of the Treaty. Article 26 combines two elements, which are of equal importance. It provides that "Every treaty in force is binding upon the parties to it and must be performed by them in good faith". This latter element, in the Court's view, implies that, in this case, it is the purpose of the Treaty, and the intentions of the parties in concluding it, which should prevail over its literal application. The principle of good faith obliges the Parties to apply it in a reasonable way and in such a manner that its purpose can be realized.The 1977 Treaty not only contains a joint investment programme, it also establishes a r?gime. According to the Treaty, the main structures of the System of Locks are the joint property of the Parties; their operation will take the form of a co-ordinated single unit; and the benefits of the project shall be equally shared. Since the Court has found that the Treaty is still in force and that, under its terms, the joint r?gime is a basic element, it considers that, unless the Parties agree otherwise, such a r?gime should be restored. The Court is of the opinion that the works at Cunovo should become a jointly operated unit within the meaning of Article 10, paragraph 1, in view of their pivotal role in the operation of what remains of the Project and for the water-management r?gime. The dam at Cunovo has taken over the role which was originally destined for the works at Dunakiliti, and therefore should have a similar status. The Court also concludes that Variant C, which it considers operates in a manner incompatible with the Treaty, should be made to conform to it. It observes that re-establishment of the joint r?gime will also reflect in an optimal way the concept of common utilization of shared water resources for the achievement of the several objectives mentioned in the Treaty.Having thus far indicated what in its view should be the effects of its finding that the 1977 Treaty is still in force, the Court turns to the legal consequences of the internationally wrongful acts committed by the Parties, as it had also been asked by both Parties to determine the consequences of the Judgment as they bear upon payment of damages.The Court has not been asked at this stage to determine the quantum of damages due, but to indicate on what basis they should be paid. Both Parties claimed to have suffered considerable financial losses and both claim pecuniary compensation for them.In the Judgment, the Court has concluded that both Parties committed internationally wrongful acts, and it has noted that those acts gave rise to the damage sustained by the Parties; consequently, Hungary and Slovakia are both under an obligation to pay compensation and are both entitled to obtain compensation. The Court observes, however, that given the fact, that there have been intersecting wrongs by both Parties, the issue of compensation could satisfactorily be resolved in the framework of an overall settlement if each of the Parties were to renounce or cancel all financial claims and counter-claims. At the same time, the Court wishes to point out that the settlement of accounts for the construction of the works is different from the issue of compensation, and must be resolved in accordance with the 1977 Treaty and related instruments. If Hungary is to share in the operation and benefits of the Cunovo complex, it must pay a proportionate share of the building and running costs.The operative paragraphs reads as follows:"155. For these reasons,THE COURT,(1) Having regard to Article 2, paragraph 1, of the Special Agreement,A. Finds, by fourteen votes to one, that Hungary was not entitled to suspend and subsequently abandon, in 1989, the works on the Nagymaros Project and on the part of the Gabc?kovo Project for which the Treaty of 16 September 1977 and related instruments attributed responsibility to it;IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Fleischhauer, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans, Re

zek; Judge ad hoc Skubiszewski;AGAINST: Judge Herczegh;B. Finds, by nine votes to six, that Czechoslovakia was entitled to proceed, in November 1991, to the "provisional solution" as described in the terms of the Special Agreement;IN FAVOUR: Vice-President Weeramantry; Judges Oda, Guillaume, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans; Judge ad hoc Skubiszewski;AGAINST: President Schwebel; Judges Bedjaoui, Ranjeva, Herczegh, Fleischhauer, Rezek;C. Finds, by ten votes to five, that Czechoslovakia was not entitled to put into operation, from October 1992, this "provisional solution";IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Bedjaoui, Guillaume, Ranjeva, Herczegh, Shi, Fleischhauer, Kooijmans, Rezek;AGAINST: Judges Oda, Koroma, Vereshchetin, Parra-Aranguren; Judge ad hoc Skubiszewski;D. Finds, by eleven votes to four, that the notification, on 19 May 1992, of the termination of the Treaty of 16 September 1977 and related instruments by Hungary did not have the legal effect of terminating them;IN FAVOUR: Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans; Judge ad hoc Skubiszewski;AGAINST: President Schwebel; Judges Herczegh, Fleischhauer, Rezek;(2) Having regard to Article 2, paragraph 2, and Article 5 of the Special Agreement,A. Finds, by twelve votes to three, that Slovakia, as successor to Czechoslovakia, became a party to the Treaty of 16 September 1977 as from 1 January 1993;IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans; Judge ad hoc Skubiszewski;AGAINST: Judges Herczegh, Fleischhauer, Rezek;B. Finds, by thirteen votes to two, that Hungary and Slovakia must negotiate in good faith in the light of the prevailing situation, and must take all necessary measures to ensure the achievement of the objectives of the Treaty of 16 September 1977, in accordance with such modalities as they may agree upon;IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans, Rezek; Judge ad hoc Skubiszewski;AGAINST: Judges Herczegh, Fleischhauer;C. Finds, by thirteen votes to two, that, unless the Parties otherwise agree, a joint operational r?gime must be established in accordance with the Treaty of 16 September 1977;IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans, Rezek; Judge ad hoc Skubiszewski;AGAINST: Judges Herczegh, Fleischhauer;D. Finds, by twelve votes to three, that, unless the Parties otherwise agree, Hungary shall compensate Slovakia for the damage sustained by Czechoslovakia and by Slovakia on account of the suspension and abandonment by Hungary of works for which it was responsible; and Slovakia shall compensate Hungary for the damage it has sustained on account of the putting into operation of the "provisional solution" by Czechoslovakia and its maintenance in service by Slovakia;IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Bedjaoui, Guillaume, Ranjeva, Herczegh, Shi, Fleischhauer, Parra-Aranguren, Kooijmans, Rezek; Judge ad hoc Skubiszewski;AGAINST: Judges Oda, Koroma, Vereshchetin;E. Finds, by thirteen votes to two, that the settlement of accounts for the construction and operation of the works must be effected in accordance with the relevant provisions of the Treaty of 16 September 1977 and related instruments, taking due account of such measures as will have been taken by the Parties in application of points 2 B and C of the present operative paragraph.IN FAVOUR: President Schwebel; Vice-President Weeramantry; Judges Oda, Bedjaoui, Guillaume, Ranjeva, Shi, Koroma, Vereshchetin, Parra-Aranguren, Kooijmans, Rezek; Judge ad hoc Skubiszewski;

AGAINST: Judges Herczegh, Fleischhauer."*President SCHWEBEL and Judge REZEK append declarations to the Judgment of the Court.Vice-President WEERAMANTRY, Judges BEDJAOUI and KOROMA append separate opinions to the Judgment of the Court.Judges ODA, RANJEVA, HERCZEGH, FLEISCHHAUER, VERESHCHETIN and PARRA-ARANGUREN, and Judge ad hoc SKUBISZEWSKI append dissenting opinions to the Judgment of the Court.(A summary of the declarations and of the opinions is attached.)** *The above summary of the Judgment has been prepared by the Registry for the use of the Press and in no way involves the responsibility of the Court. It cannot be quoted against the text of the Judgment, of which it does not constitute an interpretation.__________Annex to Press Communiqu? No. 97/10bisDeclaration of President SchwebelI am largely in agreement with the Court's Judgment and accordingly I have voted for most of its operative paragraphs. I have voted against operative paragraph 1 B essentially because I view the construction of "Variant C", the "provisional solution", as inseparable from its being put into operation. I have voted against operative paragraph 1 D essentially because I am not persuaded that Hungary's position as the Party initially in breach deprived it of a right to terminate the Treaty in response to Czechoslovakia's material breach, a breach which in my view (as indicated by my vote on paragraph 1 B) was in train when Hungary gave notice of termination.At the same time, I fully support the conclusions of the Court as to what should be the future conduct of the Parties and as to disposition of issues of compensation.__________Declaration of Judge RezekJudge Rezek considers that the 1977 Treaty is no longer in existence, since it has been abrogated by the attitude of the two Parties. From that conclusion, however, he infers consequences very similar to those which the majority infers from the continued existence of the treaty. First, there is what has been accomplished, and accomplished in good faith. There is, also and above all, the very principle of good faith which must lead here to the fulfilment of reciprocal duties remaining from a treaty which has not been implemented through the reciprocal fault of the two Parties.__________Separate opinion of Vice-President WeeramantryJudge Weeramantry agreed with the majority of the Court in all their conclusions.However, in his separate opinion, he addressed three questions dealing with aspects of environmental law ? the principle of sustainable development in balancing the competing demands of development and environmental protection, the principle of continuing environmental impact assessment, and the question of the appropriateness of the use of an inter partes legal principle such as estoppel in the resolution of issues with erga omnes implications such as a claim that environmental damage is involved.On the first question, his opinion states that both the right to development and the right to environmental protection are principles currently forming part of the corpus of international law. They could operate in collision with each other unless there was a principle of international law which indicated how they should be reconciled. That principle is the principle of sustainable development which, according to this opinion, is more than a more concept, but is itself a recognized principle of contemporary international law.In seeking to develop this principle, the Court should draw upon prior human experience, for humanity has lived for millennia with the need to reconcile the pri

nciples of development and care for the environment. Sustainable development is therefore not a new concept and, for developing it today, a rich body of global experience is available. The opinion examines a number of ancient irrigation civilizations for this purpose. The Court, as representing the main forms of civilization, needs to draw upon the wisdom of all cultures, especially in regard to areas of international law which are presently in a developmental phase. Among the principles that can be so derived from these cultures are the principles of trusteeship of earth resources, intergenerational rights, protection of flora and fauna, respect for land, maximization of the use of natural resources while preserving their regenerative capacity, and the principle that development and environmental protection should go hand in hand.In his opinion, Judge Weeramantry stresses the importance of continuous environmental impact assessment of a project as long as it continues in operation. The duty of environmental impact assessment is not discharged merely by resort to such a procedure before the commencement of a project. The standards to be applied in such continuous monitoring are the standards prevalent at the time of assessment and not those in force at the commencement of the project.The third aspect of environmental law referred to is the question whether principles of estoppel which might operate between parties are appropriate in matters such as those relating to the environment, which are of concern not merely to the two Parties, but to a wider circle. Questions involving duties of an erga omnes nature may not always be appropriately resolved by rules of procedure fashioned for inter partesdisputes. Judge Weeramantry draws attention to this aspect as one which will need careful consideration.__________Separate opinion of Judge BedjaouiJudge Bedjaoui considers that the majority of the Court has not sufficiently clarified the question of applicable law and that of the nature of the 1977 Treaty. On the first point, he states that an "evolutionary interpretation" of the 1977 Treaty can only be applied if the general rule of interpretation in Article 31 of the Vienna Convention on the Law of Treaties is respected, and that the "definition" of a concept must not be confused with the "law" applicable to that concept, nor should the "interpretation" of a treaty be confused with its "revision". Judge Bedjaoui recommends that subsequent law be taken into account only in very special situations. This applies in the present case. It is the first major case brought before the Court in which the ecological background is so sensitive that it has moved to centre stage, threatening to divert attention from treaty law. International opinion would not have understood had the Court disregarded the new law, the application of which was demanded by Hungary. Fortunately, the Court has been able to graft the new law on to the stock of Articles 15, 19 and 20 of the 1977 Treaty. Nor was Slovakia opposed to taking this law into consideration. However, in applying the so-called principle of the evolutionary interpretation of a treaty in the present case, the Court should have clarified the issue more and should have recalled that the general rule governing the interpretation of a treaty remains that set out in Article 31 of the 1969 Vienna Convention.As for the nature of the 1977 Treaty and its related instruments, in Judge Bedjaoui's view this warranted more attention from the majority of the Court. It is a crucial question. The nature of the Treaty largely conditions the succession of Slovakia to this instrument, which constitutes the substance of the applicable law, and which remains in force despite intersecting violations by both Parties.The 1977 Treaty (including related instruments) has the threefold characteristic? of being a territorial treaty,? of being a treaty to which Slovakia validly succeeded, and? of being a treaty which is still in force to day.In substance, Judge Bedjaoui does not share the opinion of the majority of the Court as to the legal characterization of Variant C, which he considers to be an offence, the unlawfulness of which affects each of the acts of the construction of this variant. The construction could be neither innocent nor neutral; it bore the stamp of the end purpose of Variant C, which was the diversion of the waters of the river. It is therefore not possible to separate construction on the one

hand and diversion on the other; Variant C as a whole is unlawful.On a different subject, Judge Bedjaoui considers that both Parties, Hungary just as much as Slovakia, have breached the 1977 Treaty. The situation created by them is characterized by intersecting violations countering each other. However it is not easy to determine the links of cause and effect in each case with certainty. The acts and conduct of the Parties sometimes intercut. A deep mutual distrust has unfortunately characterized relations between the parties for many years.On the ground, these intersecting violations gave rise to a reality which the majority of the Court did not deem it useful to characterize. For Judge Bedjaoui it seemed necessary and important to note that these intersecting violations created two effectivit?s which will continue to mark the landscape of the region in question.Judge Bedjaoui indicated the significance to be attached to taking account of the effectivit?s. In this case, taking account of the effectivit?s is not tantamount to a negation of the title. The title does not disappear; it merely adapts and does so, moreover, through involving the responsibility of the authors of these effectivit?s, who will be liable for all the necessary compensation.These effectivit?s, adapted as they have been or will be to fit the mould of a new treaty, may have breached and exceeded the existing law, but the law reins them in and governs them again in three ways:?these effectivit?s do not kill the Treaty, which survives them;?these effectivit?s do not go unpunished and entail sanctions and compensation;?and above all, these effectivit?s will be "recast", or inserted into the Treaty, whose new content to be negotiated will serve as a legitimizing text for them.Judge Bedjaoui finally turns to the necessity for the Parties to negotiate again and to do so in good faith. The renegotiation must be seen as a strict obligation, exactly like the good faith conduct it implies. This obligation flows not only from the Treaty itself, but also from general international law as it has developed in the spheres of international watercourses and the environment.__________Separate opinion of Judge KoromaIn his separate opinion, Judge Koroma stated that he supported the Court's findings that Hungary was not entitled to suspend and subsequently to abandon the works on the Project for which the Treaty had attributed responsibility to it, and that the Treaty continues to be in force. These findings, in his view, were not only in accordance with the Treaty but with the principle of pacta sunt servanda, one of the foremost principles of international law and indeed an integral part of it. In Judge Koroma's view a contrary finding would have suggested that at any time a State might unilaterally repudiate any treaty when it found its obligation to be inconvenient; this, he maintained, would seriously undermine the principle of pacta sunt servanda and the whole treaty relationship.While he shares the Court's understanding of Hungary's concern about the effects of the Project on its natural environment, he agreed that the material before the Court could not justify the unilateral repudiation of the Treaty.Judge Koroma, however, disagreed with the finding of the Court that Czechoslovakia was not entitled to put Variant C into operation. He felt that this finding did not give sufficient weight to the provisions of the Treaty, nor to the financial damage and environmental harm that Czechoslovakia would have incurred and endured had the Project been left uncompleted as Hungary's action dictated. He regarded Variant C as a genuine attempt to implement the Treaty so as to realize its aim and objective.He also did not agree that the Court appeared to treat the consequences of the Parties' "wrongful conduct" as if they were equivalent.__________Dissenting opinion of Judge OdaJudge Oda has voted against operative paragraph 1 C, since, in his view, not only the construction, but also the operation of the Cunovo dam was simply the execution of the Project as described in the 1977 Treaty between Czechoslovakia and Hungary concerning the Gabc?kovo-Nagymaros System of Locks. He considers that the provisional solution, Variant C, was the only possible option for fulfilment o

f the original Project on the river Danube. Judge Oda does not understand why the Court decided that, while the construction of Variant C ? that is to say, the Cunovo dam ? is lawful, the operation of it is a wrongful act.Judge Oda made a clear distinction between the Joint Contractual Plan (JCP), as the execution of the Project, and the 1977 Treaty, which underlies the whole Project and which had been worked out over a period of several decades. The JCP, which is similar to a "partnership" contract should have been subject to amendment and revision, as proved necessary, in a more flexible manner.The fundamental purpose of the 1977 Treaty was, in his view, to carry out the construction of the bypass canal and of the power plants at the dams of Gabc?kovo and Nagymaros. Firstly, Hungary's failure to perform its treaty obligations cannot be justified on the basis of the new international norm of environmental protection. The whole Project and the 1977 Treaty, in particular, were undoubtedly sketched out in the 1970s with due consideration for the environment of the river Danube. There is no proof with which to overturn this assumption. Secondly, it was not a violation of the Treaty for Czechoslovakia to proceed to the provisional solution ? Variant C ? as the only option open to it in order to carry out the basic Project in the event of Hungary failing to fulfil its obligation to construct the Dunakiliti dam.With regard to future negotiations between the Parties on the modalities of the execution of the Judgment, as agreed upon in the Special Agreement, Judge Oda suggests that the JCP be modified in order to include the work on the Cunovo dam which enabled the whole Project to be accomplished. As far as the environment is concerned, the Parties should proceed to an assessment of the environment of the river Danube in an effort to seek out technological solutions limiting or remedying any environmental damage caused by Czechoslovakia's construction of the bypass canal and Hungary's abandonment of the Nagymaros dam.The damages and losses suffered by Czechoslovakia owing to Hungary's failure to fulfil its Treaty obligations must be compensated. However, Hungary's abandonment of the Nagymaros dam, though that dam formed a part of the whole Project, did not cause any practical damage to Czechoslovakia. Hungary must bear a part of the cost of construction of the Cunovo dam, as that work gave life to the whole Project. It may well be admitted, however, that the whole Project (that is, the bypass canal and the Gabc?kovo power plant on that canal) are simply of benefit to Czechoslovakia and Slovakia, and that Hungary has nothing to gain from it. This point should be taken into account when the matter of compensation for loss and damage to be paid by Hungary to Slovakia is considered.__________Dissenting opinion of Judge RanjevaJudge Ranjeva disagreed with the majority of the Court in that in paragraph 155 1 C the Judgment restricts the unlawfulness of Variant C to its being put into operation and maintained in service to date. Judge Ranjeva first remarks that there is a contradiction in terms of logic between subparagraphs B and C of this same paragraph of the operative part. How can the construction of this Variant C be acknowledged to be lawful at the same time as putting it into operation is declared to be unlawful? The Judgment, in his opinion, came to this conclusion because it restricted the significance of the reciprocal wrongs ascribable to Hungary and to Czechoslovakia and Slovakia to the sole issue of the obligation to compensate for the consequences of the damage; in so doing, the Court resurrected a rule of Roman law, the rule of Pomponius. However the Court failed to examine the significance of these intersecting wrongs on another point: the causality in the sequence of events leading to the situation which is the subject of the dispute before the Court. For Judge Ranjeva, the circumstances of fact against a background of chaotic relations marked by distrust and suspicion not only made it difficult to identify the original cause of this situation but above all resulted in the fact that a wrong committed by one of the Parties triggered off a wrong committed by the other. Taking a position counter to the linear analysis of the Court, for the author it is not a matter of several wrongs which merely succeed each other but of distinct wrongs which gradually contributed to creating the situation which is the subject of the present dispute. The conclusion drawn by Judg

e Ranjeva is that the unlawfulness of the Hungarian decision, a decision which was undeniably unlawful, was not the cause but the ground or motive taken into consideration by Czechoslovakia then by Slovakia in order to justify their subsequent conduct. The second conclusion reached by the author relates to the lawfulness of Variant c. In his opinion, the distinction made between proceeding to the provisional solution and putting into operation is in fact an artificial one; it would have been plausible if there had been true equipollence between these two elements and if one of the elements could not absorb the other. Proceeding to the provisional solution was significant only if it was carried through. Thus the unlawfulness of Variant C, for Judge Ranjeva, resided not so much in its construction or commissioning, or even in the diversion of the Danube, but in replacing an international project by a national project; Variant C could not be related to any obligation under the 1977 Treaty once the Court rightly dismissed the idea of an approximate application or of an obligation to limit damage in treaty law.__________Dissenting opinion of Judge HerczeghThe dissenting opinion exhaustively presents the case for the existence of a state of necessity on the part of Hungary with regard to the construction of the Nagymaros dam. It holds that not only the putting into operation by Czechoslovakia of the "provisional solution", called "Variant C", but also the proceeding to this solution constituted a serious breach of the 1977 Treaty. Hungary was therefore justified in terminating the Treaty. Judge Herczegh consequently voted against the points of the operative part which refer expressly to the Treaty, but voted for mutual compensation by Slovakia and by Hungary for the damage each sustained on account of the construction of the system of locks forming the subject of the dispute.__________Dissenting opinion of Judge FleischhauerJudge Fleischhauer dissents on the Court's central finding that Hungary's notification of 19 May 1992 of the termination of the 1977 Treaty did not have the effect of terminating it, as the notification is found to have been premature and as Hungary is said to have forfeited its right to terminate by its own earlier violation of the Treaty. The Judge shares the finding of the Court that Hungary has violated its obligations under the 1977 Treaty when it suspended, in 1989, and later abandoned, its share in the works on the Nagymaros and on part of the Gabc?kovo Project. He also agrees with the conclusion that Czechoslovakia was not entitled to put into operation, as from October 1992, Variant C, a unilateral solution which implies the appropriation by Czechoslovakia and later Slovakia, essentially for own use, of 80 to 90 per cent of the waters of the Danube in the Treaty area, and is therefore not proportionate. However, he is of the view that when Czechoslovakia, in November 1991, moved into construction of Variant C, the point of no return was passed on both sides; at that point in time it was certain that neither would Hungary come back to the Treaty nor would Czechoslovakia agree to further delaying the damming of the Danube. The internationally wrongful act therefore was not confined to the actual damming of the river, but started in November 1991, more than six months prior to Hungary's notification of termination. Judge Fleischhauer thinks, moreover, that Hungary, although it had breached the Treaty first, had not forfeited its right to react to Variant C by termination of the Treaty, because international law does not condone retaliation that goes beyond the limits of proportionality. In situations like this, the corrective element rather lies in a limitation of the first offender's right to claim redress. As he considers the validity of the Treaty as having lapsed, he has voted against the conclusions of the Court on the consequences of the Judgment inasmuch as they are based on the continuing validity of the Treaty (2 A, B, C, E). In his view the installations on Slovak territory do not have to be dismantled, but in order to lawfully continue to use them Slovakia will have to negotiate with Hungary a water-management r?gime. Hungary does not have to construct Nagymaros any more, but Slovakia is no longer committed to the joint running of the Project.

__________Dissenting opinion of Judge VereshchetinJudge Vereshchetin takes the view that Czechoslovakia was fully entitled in international law to put into operation from October 1992 the "provisional solution" (Variant C) as a countermeasure so far as its partner in the Treaty persisted in violating its obligations. Therefore, he could not associate himself with paragraph 155 1 C of the Judgment, nor fully with paragraph 155 2 D.According to the Court's jurisprudence, established wrongful acts justify "proportionate countermeasures on the part of the State which ha[s] been the victim of these acts ..." (Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Judgment, I.C.J. Reports 1986, p. 127, para. 249). In the view of the Judge Vereshchetin, all the basic conditions for a countermeasure to be lawful were met when Czechoslovakia put Variant C into operation in October 1992. These conditions include: (1) the presence of a prior illicit act, committed by the State at which the countermeasure is targeted; (2) the necessity of the countermeasure; and (3) its proportionality in the circumstances of the case.Recognizing that the test of proportionality is very important in the r?gime of countermeasures, Judge Vereshchetin believes the Court should have assessed and compared separately: (1) the economic and financial effects of the breach as against the economic and financial effects of the countermeasure; (2) the environmental effects of the breach as against the environmental effects of the countermeasure; and (3) the effects of the breach on the exercise of the right to use commonly shared water resources as against the effects of the countermeasure on the exercise of this right.Judge Vereshchetin makes his assessment of those effects and observes in conclusion that even assuming that Czechoslovakia, as a matter of equity, should have discharged more water than it actually did into the old river bed, this assumption would have related to only one of the many aspects of the proportionality of the countermeasure, which could not in itself warrant the general conclusion of the Court that Czechoslovakia was not entitled to put Variant C into operation from October 1992.__________Dissenting opinion of Judge Parra-ArangurenMy vote against paragraph 1 C of the operative part of the Judgment is the consequence of the recognition that Hungary was not entitled to suspend and subsequently abandon, in 1989, the works which were its responsibility, in accordance with the Treaty of 16 September 1977 and related instruments. Because of that the position of Czechoslovakia was extremely difficult, not only for the huge sums invested so far but also for the environmental consequences of leaving unfinished and useless the constructions already in place, almost complete in some sections of the Gabc?kovo Project. Faced with that situation, in my opinion, Czechoslovakia was entitled to take all necessary action and for that reason the construction and putting into operation of the "provisional solution" (Variant C) cannot be considered an internationally wrongful act. Therefore, in principle, Slovakia shall not compensate Hungary on the account of the construction and putting into operation of "the provisional solution" (Variant C) and its maintenance in service by Slovakia, unless a manifest abuse of rights on its part is clearly evidenced.In my opinion, paragraph 2 A, of the operative part of the Judgment should not have been included, because the succession of Slovakia to the 1977 Treaty was neither a question submitted to the Court in the Special Agreement, nor is it a legal consequence arising out of the decision of the questions submitted by the Parties in its Article 2, paragraph 1. Furthermore, the answer of the Court is incomplete, since nothing is said in respect to the "related instruments" to the 1977 Treaty; and it does not take into consideration the position adopted by the dissenting judges who maintained that the 1977 Treaty was no longer in force.__________Dissenting opinion of Judge ad hoc SkubiszewskiWhile agreeing with the Court in all its other holdings, Judge ad hoc Skubiszewski i

s unable to concur in the broad finding that Czechoslovakia was not entitled to put Variant C into operation from October 1992 (Judgment, para. 155, point 1 C). The finding is too general. In his view the Court should have distinguished between, on the one hand, Czechoslovakia's right to take steps to execute and operate certain works on her territory and, on the other, her responsibility (and, subsequently, that of Slovakia) towards Hungary resulting from the diversion of most of the waters of the Danube into Czechoslovak territory, especially in the period preceding the conclusion of the Hungarian-Slovak Agreement of 19 April 1995.The withdrawal of Hungary from the Project left Czechoslovakia with the legal possibility of doing on her territory what she was allowed to do by general law on international rivers. As a whole, the "provisional solution" was and is lawful. That evaluation is not changed by one element of it, i.e., sharing of the waters of the Danube, which called for redress and remedy. Having recognized the serious problems with which Czechoslovakia was confronted as a result of Hungary's action, the Court should have applied equity as part of international law. It would then arrive at a holding that would have given more nuance to its decision.Notwithstanding the Parties' mutual legal claims for compensation much speaks in favour of a "zero option" (Judgment, para. 153). That option should facilitate the settlement of the dispute.