Case Concerning Pulp Mills on the River Uruguay (Argentina/Uruguay), International Court of Justice, Judgment of 20 April 2010

The dispute before the Court has arisen in connection with the planned construction authorized by Uruguay of one pulp mill and the construction and commissioning of another, also authorized by Uruguay, on the River Uruguay.

In the written proceedings, the following submissions were presented by the Parties:

On behalf of the Government of Argentina,

“For all the reasons described in this Memorial, the Argentine Republic requests the International Court of Justice:

1) to find that by unilaterally authorizing the construction of the CMB and Orion pulp mills and the facilities associated with the latter on the left bank of the River Uruguay, in breach of the obligations resulting from the Statute of 26 February 1975, the Eastern Republic of Uruguay has committed the internationally wrongful acts set out in Chapters IV and V of this Memorial, which entail its international responsibility;

2) to adjudge and declare that, as a result, the Eastern Republic of Uruguay must:

i. cease immediately the internationally wrongful acts referred to above;

ii. resume strict compliance with its obligations under the Statute of the River Uruguay of 1975

iii. re-establish on the ground and in legal terms the situation that existed before the internationally wrongful acts referred to above were committed;

iv. pay compensation to the Argentine Republic for the damage caused by these internationally wrongful acts that would not be remedied by that situation being restored, of an amount to be determined by the Court at a subsequent stage of these proceedings;

v. provide adequate guarantees that it will refrain in future from preventing the Statute of the River Uruguay of 1975 from being applied, in particular the consultation procedure established by Chapter II of that Treaty.

On behalf of the Government of Uruguay,

“On the basis of the facts and arguments set out above, and reserving its right to supplement or amend these Submissions, Uruguay requests that the Court adjudge and declare that the claims of Argentina are rejected.”

“Based on all the above, it can be concluded that:

1) Argentina has not demonstrated any harm, or risk of harm, to the river or its ecosystem resulting from Uruguay’s alleged violations of its substantive obligations under the 1975 Statute that would be sufficient to warrant the dismantling of the Botnia plant;

2) the harm to the Uruguayan economy in terms of lost jobs and revenue would be substantial;

3) in light of points (a) and (b), the remedy of tearing the plant down would therefore be disproportionately onerous, and should not be granted;

4) if the Court finds, notwithstanding all the evidence to the contrary, that Uruguay has violated its procedural obligations to Argentina, it can issue a declaratory judgment to that effect, which would constitute an adequate form of satisfaction;

5) if the Court finds, notwithstanding all the evidence to the contrary, that the plant is not in complete compliance with Uruguay’s obligation to protect the river or its aquatic environment, the Court can order Uruguay to take whatever additional protective measures are necessary to ensure that the plant conforms to the Statute’s substantive requirements;

6) if the Court finds, notwithstanding all the evidence to the contrary, that Uruguay has actually caused damage to the river or to Argentina, it can order Uruguay to pay Argentina monetary compensation under Articles 42 and 43 of the Statute; and

7) the Court should issue a declaration making clear the Parties are obligated to ensure full respect for all the rights in dispute in this case, including Uruguay’s right to continue operating the Botnia plant in conformity with the provisions of the 1975 Statute.

The boundary between Argentina and Uruguay in the River Uruguay is defined by the bilateral Treaty entered into for that purpose at Montevideo on 7 April 1961 (UNTS, Vol. 635, No. 9074, p. 98). Articles 1 to 4 of the Treaty delimit the boundary between the Contracting States in the river and attribute certain islands and islets in it to them. Articles 5 and 6 concern the regime for navigation on the river. Article 7 provides for the establishment by the parties of a “regime for the use of the river” covering various subjects, including the conservation of living resources and the prevention of water pollution of the river. Articles 8 to 10 lay down certain obligations concerning the islands and islets and their inhabitants.

The “régime for the use of the river” contemplated in Article 7 of the 1961 Treaty was established through the 1975 Statute (see para- graph 1 above). Article 1 of the 1975 Statute states that the parties adopted it “in order to establish the joint machinery necessary for the optimum and rational utilization of the River Uruguay, in strict observance of the rights and obligations arising from treaties and other inter- national agreements in force for each of the parties”. After having thus defined its purpose (Article 1) and having also made clear the meaning of certain terms used therein (Article 2), the 1975 Statute lays down rules governing navigation and works on the river (Chapter II, Articles 3 to 13), pilotage (Chapter III, Articles 14 to 16), port facilities, unloading and additional loading (Chapter IV, Articles 17 to 18), the safeguarding of human life (Chapter V, Articles 19 to 23) and the salvaging of property (Chapter VI, Articles 24 to 26), use of the waters of the river (Chapter VII, Articles 27 to 29), resources of the bed and subsoil (Chapter VIII, Articles 30 to 34), the conservation, utilization and development of other natural resources (Chapter IX, Articles 35 to 39), pollution (Chapter X, Articles 40 to 43), scientific research (Chapter XI, Articles 44 to 45), and various powers of the parties over the river and vessels sailing on it (Chapter XII, Articles 46 to 48). The 1975 Statute sets up the Administrative Commission of the River Uruguay (hereinafter “CARU”, from the Spanish acronym for “Comisión Administradora del Río Uruguay”) (Chapter XIII, Articles 49 to 57), and then establishes procedures for conciliation (Chapter XIV, Articles 58 to 59) and judicial settlement of disputes (Chapter XV, Article 60). Lastly, the 1975 Statute contains transitional (Chapter XVI, Articles 61 to 62) and final (Chapter XVII, Article 63) provisions

The first pulp mill at the root of the dispute was planned by “Celulosas de M’Bopicuá S.A.” (hereinafter “CMB”), a company formed by the Spanish company ENCE (from the Spanish acronym for “Empresa Nacional de Celulosas de España”, hereinafter “ENCE”). This mill, hereinafter referred to as the “CMB (ENCE)” mill, was to have been built on the left bank of the River Uruguay in the Uruguayan department of Río Negro opposite the Argentine region of Gualeguaychú, more specifically to the east of the city of Fray Bentos, near the “General San Martín” international bridge.

The second industrial project at the root of the dispute before the Court was undertaken by “Botnia S.A.” and “Botnia Fray Bentos S.A.” (hereinafter “Botnia”), companies formed under Uruguayan law in 2003 specially for the purpose by Oy Metsä-Botnia AB, a Finnish company. This second pulp mill, called “Orion” (hereinafter the “Orion (Botnia)” mill), has been built on the left bank of the River Uruguay, a few kilo- metres downstream of the site planned for the CMB (ENCE) mill, and also near the city of Fray Bentos. It has been operational and functioning since 9 November 2007.

The dispute submitted to the Court concerns the interpretation and application of the 1975 Statute, namely, on the one hand whether Uruguay complied with its procedural obligations under the 1975 Statute in issuing authorizations for the construction of the CMB (ENCE) mill as well as for the construction and the commissioning of the Orion (Botnia) mill and its adjacent port; and on the other hand whether Uruguay has complied with its substantive obligations under the 1975 Statute since the commissioning of the Orion (Botnia) mill in November 2007

Characterizing the provisions of Articles 1 and 41 of the 1975 Statute as “referral clauses”, Argentina ascribes to them the effect of incorporating into the Statute the obligations of the Parties under general international law and a number of multilateral conventions pertaining to the protection of the environment. Consequently, in the view of Argentina, the Court has jurisdiction to determine whether Uruguay has com[1]plied with its obligations under certain international conventions.

The Court now therefore turns its attention to the issue whether its jurisdiction under Article 60 of the 1975 Statute also encompasses obligations of the Parties under international agreements and general international law invoked by Argentina and to the role of such agreements and general international law in the context of the present case.

Argentina asserts that the 1975 Statute constitutes the law applicable to the dispute before the Court, as supplemented so far as its application and interpretation are concerned, by various customary principles and treaties in force between the Parties and referred to in the Statute. Relying on the rule of treaty interpretation set out in Article 31, para- graph 3 (c) of the Vienna Convention on the Law of Treaties, Argentina contends notably that the 1975 Statute must be interpreted in the light of principles governing the law of international watercourses and principles of international law ensuring protection of the environment. It asserts that the 1975 Statute must be interpreted so as to take account of all “relevant rules” of international law applicable in the relations between the Parties, so that the Statute’s interpretation remains current and evolves in accordance with changes in environmental standards. In this connection, Argentina refers to the principles of equitable, reasonable and non[1]injurious use of international watercourses, the principles of sustainable development, prevention, precaution and the need to carry out an environmental impact assessment. It contends that these rules and principles are applicable in giving the 1975 Statute a dynamic interpretation, although they neither replace it nor restrict its scope.

Argentina further considers that the Court must require compliance with the Parties’ treaty obligations referred to in Articles 1 and 41 (a) of the 1975 Statute. Argentina maintains that the “referral clauses” contained in these articles make it possible to incorporate and apply obligations arising from other treaties and international agreements binding on the Parties. To this end, Argentina refers to the 1973 Convention on International Trade in Endangered Species of Wild Fauna and Flora (hereinafter the “CITES Convention”), the 1971 Ramsar Convention on Wetlands of International Importance (hereinafter the “Ramsar Convention”), the 1992 United Nations Convention on Biological Diversity (hereinafter the “Biodiversity Convention”), and the 2001 Stockholm Convention on Persistent Organic Pollutants (hereinafter the “POPs Convention”). It asserts that these conventional obligations are in addition to the obligations arising under the 1975 Statute, and observance of them should be ensured when application of the Statute is being considered. Argentina maintains that it is only where “more specific rules of the [1975] Statute (lex specialis)” derogate from them that the instruments to which the Statute refers should not be applied.

The Parties nevertheless are in agreement that the 1975 Statute is to be interpreted in accordance with rules of customary international law on treaty interpretation, as codified in Article 31 of the Vienna Convention on the Law of Treaties.

The Court notes that the object and purpose of the 1975 Statute, set forth in Article 1, is for the Parties to achieve “the optimum and rational utilization of the River Uruguay” by means of the “joint machinery” for co-operation, which consists of both CARU and the procedural provisions contained in Articles 7 to 12 of the Statute. The Court has observed in this respect, in its Order of 13 July 2006, that such use should allow for sustainable development which takes account of “the need to safeguard the continued conservation of the river environment and the rights of economic development of the riparian States” (Pulp Mills on the River Uruguay (Argentina v. Uruguay), Provisional Measures, Order of 13 July 2006, I.C.J. Reports 2006, p. 133, para. 80)

In the Gabcˇikovo-Nagymaros case, the Court, after recalling that “[t]his need to reconcile economic development with protection of the environment is aptly expressed in the concept of sustainable development”, added that “[i]t is for the Parties themselves to find an agreed solution that takes account of the objectives of the Treaty” (Gabcˇíkovo- Nagymaros Project (Hungary/Slovakia), Judgment, I.C.J. Reports 1997, p. 78, paras. 140-141).

The Court observes that it is by co-operating that the States concerned can jointly manage the risks of damage to the environment that might be created by the plans initiated by one or other of them, so as to prevent the damage in question, through the performance of both the procedural and the substantive obligations laid down by the 1975 Statute. However, whereas the substantive obligations are frequently worded in broad terms, the procedural obligations are narrower and more specific, so as to facilitate the implementation of the 1975 Statute through a process of continuous consultation between the parties concerned. The Court has described the régime put in place by the 1975 Statute as a “comprehensive and progressive régime” (Pulp Mills on the River Uruguay (Argentina v. Uruguay), Provisional Measures, Order of 13 July 2006, I.C.J. Reports 2006, p. 133, para. 81), since the two categories of obligations mentioned above complement one another perfectly, enabling the parties to achieve the object of the Statute which they set themselves in Article 1.

The Court notes that, just as the original Spanish text, the French translation of this Article (see paragraph 80 above) distinguishes between the obligation to inform (“comunicar”) CARU of any plan falling within its purview (first paragraph) and the obligation to notify (“notificar”) the other party (second paragraph). By contrast, the English translation uses the same verb “notify” in respect of both obligations. In order to con- form to the original Spanish text, the Court will use in both linguistic versions of this Judgment the verb “inform” for the obligation set out in the first paragraph of Article 7 and the verb “notify” for the obligation set out in the second and third paragraphs. The Court considers that the procedural obligations of informing, notifying and negotiating constitute an appropriate means, accepted by the Parties, of achieving the objective which they set themselves in Article 1 of the 1975 Statute. These obligations are all the more vital when a shared resource is at issue, as in the case of the River Uruguay, which can only be protected through close and continuous co-operation between the riparian States.

The Court notes that the obligation of the State initiating the planned activity to inform CARU constitutes the first stage in the procedural mechanism as a whole which allows the two parties to achieve the object of the 1975 Statute, namely, the optimum and rational utilization of the River Uruguay”. This stage, provided for in Article 7, first para- graph, involves the State which is initiating the planned activity informing CARU thereof, so that the latter can determine “on a preliminary basis” and within a maximum period of 30 days whether the plan might cause significant damage to the other party.

To enable the remainder of the procedure to take its course, the parties have included alternative conditions in the 1975 Statute: either that the activity planned by one party should be liable, in CARU’s opinion, to cause significant damage to the other, creating an obligation of prevention for the first party to eliminate or minimize the risk, in consultation with the other party ; or that CARU, having been duly informed, should not have reached a decision in that regard within the prescribed period.

The Court points out that the principle of prevention, as a customary rule, has its origins in the due diligence that is required of a State in its territory. It is “every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States” (Corfu Channel (United Kingdom v. Albania), Merits, Judgment, I.C.J. Reports 1949, p. 22). A State is thus obliged to use all the means at its disposal in order to avoid activities which take place in its territory, or in any area under its jurisdiction, causing significant damage to the environment of another State. This Court has established that this obligation “is now part of the corpus of international law relating to the environment” (Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, I.C.J. Reports 1996 (I), p. 242, para. 29).

In the view of the Court, the obligation to inform CARU allows for the initiation of co-operation between the Parties which is necessary in order to fulfil the obligation of prevention. This first procedural stage results in the 1975 Statute not being applied to activities which would appear to cause damage only to the State in whose territory they are carried out.

Uruguay maintains that it was not required to transmit the environ- mental impact assessments to Argentina before issuing the initial environ- mental authorizations to the companies, these authorizations having been adopted on the basis of its legislation on the subject.

Argentina, for its part, first points out that the environmental impact assessments transmitted to it by Uruguay were incomplete, particularly in that they made no provision for alternative sites for the mills and failed to include any consultation of the affected populations. The Court will return later in the Judgment to the substantive conditions which must be met by environmental impact assessments (see para- graphs 203 to 219). Furthermore, in procedural terms, Argentina considers that the initial environmental authorizations should not have been granted to the companies before it had received the complete environmental impact assessments, and that it was unable to exercise its rights in this context under Articles 7 to 11 of the 1975 Statute.

The Court notes that the environmental impact assessments which are necessary to reach a decision on any plan that is liable to cause significant trans-boundary harm to another State must be notified by the party concerned to the other party, through CARU, pursuant to Article 7, second and third paragraphs, of the 1975 Statute. This notification is intended to enable the notified party to participate in the process of ensuring that the assessment is complete, so that it can then consider the plan and its effects with a full knowledge of the facts (Article 8 of the 1975 Statute).

The Court observes that this notification must take place before the State concerned decides on the environmental viability of the plan, taking due account of the environmental impact assessment submitted to it.

The Court concludes from the above that Uruguay failed to comply with its obligation to notify the plans to Argentina through CARU under Article 7, second and third paragraphs, of the 1975 Statute.

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