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The United Nations Compensation Commission— Developments Since October 1992

Published online by Cambridge University Press:  27 February 2017

Ronald J. Bettauer
Ronald J. Bettauer*
Affiliation:
International Claims and Investment Disputes, U.S. Department of State
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Extract

Paragraph 16 of Security Council Resolution 687 (April 3, 1991) reaffirmed that “Iraq … is liable under international law for any direct loss, damage, … or injury to foreign Governments, nationals and corporations, as a result of Iraq’s unlawful invasion and occupation of Kuwait.” This resolution and Security Council Resolution 692 (May 20, 1991) established the United Nations Compensation Commission (UNCC) to administer a system to provide compensation for claims for which Iraq is liable under paragraph 16. The Commission has a Governing Council, composed of the members of the Security Council; panels of commissioners, appointed from time to time to review particular groups of claims; and a secretariat headed by an Executive Secretary. The Commission’s Governing Council first met in Geneva in July 1991 and in the first year of its existence adopted decisional criteria for six categories of claims: Category “A” — claims of individuals for fixed amounts for departure from Iraq or Kuwait; Category “B” — claims of individuals for fixed amounts for death or serious personal injury; Category “C” —claims of individuals for amounts up to $100,000; Category “D” —claims of individuals for amounts above $100,000; Category “E” —claims of corporations; and Category “F” — claims of governments and international organizations.

Type
Current Developments
Information
American Journal of International Law , Volume 89 , Issue 2 , April 1995 , pp. 416 - 423
Copyright
Copyright © American Society of International Law 1995

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References

1 UN Docs. S/AC.26/1991/1 (Aug. 2); S/AC.26/1991/7/Rev.1 (Mar. 17, 1992).

2 John R. Crook, The United Nations Compensation Commission —A New Structure to Enforce State Responsibility, 87 AJIL 144 (1993). See also The United Nations Compensation Commission (13th Sokol Colloquium, Richard B. Lillich ed., 1995). This author's chapter in that book deals with the establishment of the UN Compensation Commission and addresses Governing Council decisions through December 1992.

3 This information is current as of November 1, 1994. These claims break down as follows. The UNCC has received 907,357 “A” claims from 82 countries with an asserted value of $3.5 billion; 5,703 “B” claims from 47 countries with an asserted value of about $18.9 million; 1,573,009 “C” claims from 87 countries and international organizations (including the consolidated claim of 1.24 million workers from Egypt) with an asserted value of about $4.2 billion; 9,377 “D” claims from 52 countries and international organizations; 7,175 “E” claims from 64 countries; and 214 “F” claims from 42 countries and international organizations. The New York Times asserts that the UNCC has received about 2.6 million claims from 94 countries with an asserted value of $ 162 billion. Eric Schmitt, Righting Wrongs of War: Billions in Claims Against Iraq, N.Y. Times, Nov. 18, 1994, at B9.

4 The United States has submitted about 3100 individual claims with an asserted value of about $215 million, 144 claims by U.S. companies with an asserted value of about $1.5 billion, and five government claims with an asserted value of about $17 million.

5 The decisions of the Governing Council made between July 1991 and September 1992 are reviewed in Crook, supra note 2; they will therefore not be reviewed here.

6 UN Doc. S/AC.26/Dec.20 (1994).

7 UN Press Release SG/SM/94/86 (June 8, 1994).

8 Article 37(e) of the rules of procedure requires that the panel report “briefly explain the reasons for the recommendations.” UN Doc. S/AC.26/1992/10. The Governing Council is called on to review and approve only the amounts recommended to be awarded, not the panel's reasoning. Id., Art. 40(1).

9 See UN Doc. S/AC.26/1994/1 (May 26) [hereinafter B Panel Report]. The panel was composed of Mohamed Bennouna (chairman), Denise Bindschedler-Robert, and Fang Ping.

10 UN Doc. S/AC.26/1992/10, Art. 40(5) (June 26).

11 The B Panel Report, supra note 9, at 12–29, discusses the scope of claims covered extensively.

12 Id. at 7–9.

13 Id. at 10.

14 See UN Doc. S/AC.26/1992/10, Art. 37(d) (June 26).

15 B Panel Report, supra note 9, at 45.

16 UN Doc. S/AC.26/1994/2 (Oct. 21) [hereinafter A Panel Report]. The panel was composed of Kamal Hossain (chairman), Matti Pellonpää, and Rafael Rivas Posada. José Maria Ruda, the original chairman of the panel, passed away on July 7, 1994. On August 12, 1994, the Governing Council appointed Mr. Rivas Posada as a new member of the panel and Mr. Hossain as chairman.

17 UN Press Release 1K/94/3 (Oct. 20, 1994).

18 UN Doc. S/AC.26/1994/3 (Dec. 21).

19 UN Doc. S/AC.26/1992/14 (Jan. 4, 1993).

20 At its first meeting in July-August 1991, there was only the Executive Secretary. By December 1991, there were eight on the staff. The staffing level budgeted for 1992 was 48. The staffing level requested by November 1994 was 107.

21 It was important to establish this committee for two other reasons. First, the UN Comptroller's office in New York has sought to exercise a review function over the budget of the UNCC. It was thought that if the Executive Secretary had Governing Council support—support of the member states of the Security Council—he would have less difficulty in this process. Second, there was a move for the UN Advisory Committee on Administrative and Budgetary Questions (ACABQ) to review the UNCC's administrative budget—which would be inappropriate since the UNCC's administrative budget was not funded by UN-assessed contributions, but by Iraq out of the Compensation Fund, in accordance with the relevant resolutions. Moreover, the ACABQ has no knowledge of the UNCC's program and the reasonableness of its budget requests. A key element in persuading the ACABQ that review by it of the UNCC administrative budget was inappropriate was the fact that a more appropriate budget review committee was established by the UNCC in Geneva to provide member state budget oversight.

22 UN Doc. S/AC.26/1992/15(Jan. 4, 1993).

23 UN Doc. S/AC.26/1992/16(Jan. 4, 1993).

24 Paragraph 6 of Decision 9 provides that the trade embargo cannot be the basis for compensation, but that compensation will be provided to the extent that Iraq's unlawful invasion and occupation of Kuwait constituted a cause of direct loss, damage or injury that is separate and distinct from the trade embargo. See Crook, supra note 2, at 154–55.

25 Note the similarities of the system in Decision 17 to the payment systems in the various titles of the International Claims Settlement Act, 22 U.S.C.A. §§1621 – 1645o (West Supp. 1994).

26 UN Doc. S/AC.26/Dec.17 (1994) (Mar. 24).

27 Iraq has not been willing to export oil under the terms of UN Security Council Resolutions 706 (Aug. 15, 1991) and 712 (Sept. 19, 1991). Further, sanctions under UN Security Council Resolution 661 (1990) have not been lifted pursuant to paragraph 22 of UN Security Council Resolution 687 (1991). Thus, the only funds available for the Compensation Fund continue to be those provided under Security Council Resolution 778 (1992). This resolution required states to transfer to the escrow account established under Resolutions 706 (1991) and 712 (1991) frozen assets that are the proceeds of Iraqi oil sales (up to $200 million or one-half the total funding obtained under the resolution, subject to the rights of third parties) and the proceeds of the sale of any Iraqi-owned petroleum located outside Iraq. It further urged states to make voluntary contributions to the escrow account. Thirty percent of the funds required to be transferred and any earmarked voluntary contributions are transferred to the Compensation Fund. (Once Iraq starts exporting oil, all the funds obtained under Resolution 778 (1992) are to be repaid with interest.) As of November 1994, Resolution 778 (Oct. 2, 1992) has provided the Compensation Fund with almost $60 million — sufficient for the administrative operation of the Commission from 1991 to the present and for the payment of the first “B” claims installment (about $2.7 million). Obviously, payments in accordance with the system established by Decision 17 are not yet possible.

28 UN Doc. S/AC.26/Dec.18 (1994) (Mar. 24).

29 A 1.5% limitation was adopted for “A,” “B” and “C” claims and a 3% limitation for “D,” “E” and “F” claims. Note that the 1.5% limitation is consistent with the administration's proposed Iraq Claims Act, see §4, S. 1401, 103d Cong., 1st Sess. (Aug. 6, 1993), and with the Iraq claims bill passed by the House of Representatives, see §5, H.R. 3221, 103d Cong., 2d Sess. (May 2, 1994); H.R. Rep. NO. 396, 103d Cong., 1st Sess. 10–11 (1993).

30 UN Doc. S/AC.26/Dec.19 (1994) (Mar. 24).

31 UN Doc. S/AC.26/1992/11 (June 26).

32 UN Doc. S/AC.26/Dec.21 (1994) (Oct. 21).

33 See UN Doc. S/AC.26/1992/12 (Sept. 25).

34 UN Doc. S/AC.26/1992/10, Art. 12(2) (June 26).

35 UN Doc. S/AC.26/Dec.23 (1994) (Oct. 21).

36 SC Res. 687, para. 22 (Apr. 3, 1991), which sets conditions for the removal of sanctions and requires approval by the Security Council of the “programme called for in paragraph 19,” in addition to requiring that Iraq complete all actions contemplated under paragraphs 8, 9, 10, 11, 12 and 13 of the resolution. Paragraph 19 asks the Secretary-General to develop, among other things, recommendations for the mechanism for funding the Compensation Fund by the deduction of a percentage of the value of the exports of petroleum and petroleum products from Iraq. The Secretary-General's discussion of this matter is contained in the Report of the Secretary-General pursuant to paragraph 19 of Security Council resolution 687 (1991), UN Doc. S/22559, paras. 14–18(1991). Rather than approving any particular approach, the Security Council, inSCRes. 692, para. 5 (May 20, 1991), asked the UNCC Governing Council to proceed to implement the funding system, taking into account the Secretary-General's recommendations. On October 18, 1991, the Governing Council adopted UNCC Dec. No. 6, UN Doc. S/AC.26/1991/6, which established a funds collection mechanism, but reserved a number of items for further Security Council approval (see id., paras. 12, 19). The Governing Council envisaged that the Security Council resolution to be adopted pursuant to paragraph 22 of Resolution 687 would include provisions (a) reaffirming the immunity of the Escrow Account and Compensation Fund, (b) establishing the immunity of the Iraqi petroleum and petroleum products while in transit, until title is transferred to a purchaser, and (c) requiring that all states take any necessary domestic measures to implement the arrangements decided upon by the Governing Council for ensuring payments to the Compensation Fund (i.e., the arrangements set forth in UNCC Dec. No. 6 and in any revisions of the decision).