10 August 2005

The United Nations Compensation Commission (UNCC) issued its fifth and final report on awards of compensation for environmental and public health damage resulting from Iraq’s 1990-91 invasion and occupation of Kuwait on June 30, 2005.[1]  The report addressed issues that have rarely come before an international body: whether compensation is owed for damage to natural resources that have no commercial value and, if so, how the loss should be valued.  Other decisions of interest relate to claims for post-traumatic stress disorder and other public health damage.  The three commissioners of the “F4? Panel who were charged with assessing these claims also ended speculation about the extent of Iraq’s liability for the approximately US$ 50 billion that was sought in this final group of claims, by recommending awards that totaled approximately $252 million.

The United Nations Security Council established the UNCC as a neutral, fact-finding, quasi-judicial organization to assess claims of compensation for losses related to the 1990-91 Gulf war and to make awards to successful claimants.[2]  Security Council Resolution 687 (1991) states that Iraq is “liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign Governments, nationals and corporations, as a result of Iraq’s unlawful invasion and occupation of Kuwait.”[3]

During the Gulf War, the environment in Kuwait and neighboring countries suffered damage from oil well fires that burned for months, releasing airborne contaminants; the damaged oil wells that spilled lakes of oil onto the desert surface; oil spills into the Persian Gulf that were many times larger than the Exxon Valdez spill; mines and other ordnance left not only on land but also in coastal waters; and other military activities.   These and other impacts of the war affected public health.  Some countries also received influxes of refugees fleeing the war who needed water, fuel, and medical care. 

Under the program established by the Security Council, compensation has already been awarded for monitoring and assessment of damage, response costs, and remediation of damage.  In this last phase (leading to the fifth and final environmental claims report), the UNCC made awards to the Governments of Kuwait, Iran, Jordan and Saudi Arabia for losses of various natural resources, losses of crops and livestock, loss of water resources, costs of remediation, and damage to public health.

In the written submissions and the oral proceedings regarding this group of claims, Iraq and the claimants debated whether “pure environmental damage? could be compensable.[4]   They also disputed whether a temporary loss of use of natural resources, that is, the loss suffered from the time a natural resource is damaged until it recovers through natural means or with the assistance of active remediation, could be compensable. 

The Panel found that under the liability provision of Security Council resolution 687 (1991) an environmental loss would be compensable if it were a direct result of Iraq’s invasion and occupation of Kuwait, whether or not it had commercial value, and whether the loss was temporary or permanent.[5]  Moreover, the Panel did not consider that the exclusion of compensation for pure environmental damage in some international conventions on civil liability was a valid basis for asserting that international law, in general, prohibits compensation for such damage when it results from an internationally wrongful act.[6]

 

Having decided that pure environmental damage could be compensable, the Panel turned its attention to the difficult problem of quantifying the amount of compensation that would be appropriate.  Where a resource that has commercial value, like a crop, is damaged for a period of time, the analysis is relatively straightforward.  Crops can be treated like other property, and valued using an appropriate market price for the period of time that the damage persists, adjusted as needed to reflect the influence of other sources of damage.[7]  On the other hand, a loss of biodiversity that persists for a number of years has no market price as a point of reference.

Several claimants put a value on their temporary natural resource losses by proposing environmental projects designed to compensate for the loss of ecological services that the natural resources would have provided, had they not been damaged.[8]  Although the Panel viewed the proposed valuation methods using compensatory restoration projects as “relatively novel,” it was willing to apply them “where there is sufficient evidence that primary restoration will not fully compensate for any identified losses.”[9]  Accordingly, the Panel made awards that were quantified according to the cost of various compensatory projects: a cooperative rangeland management program to restore rangeland and wildlife habitat damaged by the influx of refugees into Jordan, and shoreline preserves in Kuwait and Saudi Arabia.  In another case — Iran’s claim for damage to rangelands from the presence of refugees — the Panel found it more appropriate to use the price of fodder to calculate an award rather than the value that Iran derived from lost ecological services.

The claims for damage to public health amounted to approximately $25 billion, claimed by five countries: Iran, Jordan, Kuwait, Saudi Arabia and Syria.  While the Panel acknowledged that Governments had broad rights to make claims for general damage to the health and well being of their citizens, the actual awards were a small percentage of the claimed amount. The public health claims that received awards were Kuwait’s claim for costs of treating post-traumatic stress disorder and injuries from mines and ordnance; Iran’s claim for costs of medical treatment and public health facilities made available to refugees; and a study of cancer and hematological disorder in Iran.

The Panel stated that, in principle, a State could be compensated for the costs of monitoring and medical screening to investigate and combat increased health risks; expenses actually incurred by a State in combating increased public health problems or public health risks;[10][11] if these losses resulted directly from Iraq’s invasion and occupation of Kuwait.  and general damage related to public health, such as claims for loss of life or reduced quality of life,

The UNCC had already afforded individuals compensation for death of family members, including medical, burial and other expenses, loss of financial support that would have gone to a spouse, a child or parent, and mental pain and anguish of the survivors.  Iraq had argued that this individual remedy supplanted the State’s right to claim.[12]  The Panel rejected the argument on the basis that the State was asserting its own, separate right “to ensure compliance with the rules of international law in respect of its nationals,” and was not acting on behalf of the individuals.[13]  Thus, the Panel found that Kuwait and Iran had standing to claim compensation for loss of well being suffered by their nationals due to post-traumatic stress disorder, although it found that there was insufficient evidence to support awards in these instances.[14]

The Panel found that States did not have standing with respect to mental pain and anguish claims, because Governing Council decisions had restricted the right to bring such claims to certain categories of individuals.[15]  Consequently, the Panel found that Jordan did not have standing to seek compensation of mental pain and suffering that it alleged was due to increased crime resulting from the invasion and occupation.[16]

In the end, insufficiency of evidence was frequently an insurmountable problem for the environmental and public health claims.  The report identifies a number of critical evidentiary shortfalls.  For example, the Panel found there was evidence that the smoke from the oil well fires reached Iran.  However, Iran was unable to provide sufficient evidence to link contaminants from the plume with the alleged damage to its cultural heritage artifacts and sites.[17]  In a number of cases, the Panel recognized that some damage occurred, but the evidence submitted was insufficient to distinguish the quantum of damage caused directly by Iraq’s invasion and occupation of Kuwait from other sources of damage, such as oil pollution from operation of oil platforms, terminals and oil processing facilities.[18]  In such cases, the Panel did not recommend an award.  This is not new.  Indeed, much of the development of environmental legislation creating strict, joint and several liability for those who control environmental hazards has occurred because of the difficulty of proving causation by direct evidence.

 

About the author Cymie R. Payne, an ASIL member, is an environmental lawyer working at the United Nations Compensation Commission.

Footnotes [1]United Nations Compensation Commission, Report and recommendations made by the Panel of Commissioners concerning the fifth instalment of “F4? claims, UN Doc. S/AC.26/2005/10 (2005).  Hereinafter “Fifth instalment F4 report”.  UNCC reports and other information can be found on the internet at http://www.uncc.ch. [2] A further discussion of the procedural aspects of the environmental claims review is provided in the Fifth instalment F4 report, paras 7-20 and 87-97. [3] SC Res. 687, 1991, para. 16.  [4] Fifth instalment F4 report, paras 45-51.  The International Law Commission Draft Articles on Responsibility of States for Internationally Wrongful Acts, article 36(2), states, with respect to the scope of compensation as a remedy: “The compensation shall cover any financially assessable damage ?”.   Report of the International Law Commission on the Work of Its Fifty-third Session, UN GAOR, 56th Sess., Supp. No. 10, at 43, UN Doc. A/56/10 (2001).  The ILC Commentaries to article 36(2) explain, “The qualification “financially assessable? is intended to exclude compensation for what is sometimes referred to as “moral damage? to a State”. Ibid. at 244.  The Commentaries further state “However, environmental damage will often extend beyond that which can be readily quantified in terms of clean-up costs or property devaluation.  Damage to such environmental values (biodiversity, amenity, etc – sometimes referred to as “non-use values?) is, as a matter of principle, no less real and compensable than damage to property, though it may be difficult to quantify.”  Ibid. at 252. [5] Fifth instalment F4 report, para. 55-57. [6] Fifth instalment F4 report, para. 58 (referencing the International Convention on Civil Liability for Oil Pollution Damage, 1969, as modified by the Protocol of 1992, United Nations, Treaty Series, Vol. 973, No. 14097, p. 3; and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971, as modified by the Protocol of 1992, United Nations, Treaty Series, Vol. 1110, No. 17146, p. 57). [7]  See, Fifth instalment F4 report, para. 103-18 (finding that reduced crop yields in Iran are compensable). [8] These claimants used “Habitat Equivalency Analysis? to determine the amount of compensation claimed.  This approach involves assessment of the nature and extent of the temporary loss of ecological services from the damaged resources, determination of the gain in ecological services anticipated from the compensatory projects, and calculation of the cost of the compensatory projects. See, e.g., Fifth instalment F4 report, para. 420. [9] Fifth instalment F4 report, paras 81-82. [10] Fifth instalment F4 report, para. 67-68. [11] Fifth instalment F4 report, para. 69. [12] Fifth instalment F4 report, para. 62. [13] Fifth instalment F4 report, para. 70. [14] Fifth instalment F4 report, para. 289 (no compensation recommended for this element of Iran’s claim because evidence was not sufficient to establish that there was an increase in the number of cases of PTSD and panic disorder requiring treatment in Iran as a direct result of Iraq’s invasion and occupation of Kuwait), para. 515 (no compensation for this element of Kuwait’s claim because evidence was not sufficient to demonstrate the nature and extent of the damage). [16] Fifth instalment F4 report, para. 71.  Governing Council decision 3 (S/AC.26/1991/3) (stating that compensation for mental pain and anguish will be provided where various harms were suffered by the individual or the spouse, child or parent).  See also, Governing Council decision 8 (S/AC.26/1921/8) (adopting ceilings for compensation for mental pain and anguish). [16] Fifth instalment F4 report, para. 404. [17] Fifth instalment F4 report, paras 204-207 (no compensation for Iran’s claim for damage to cultural heritage due to insufficient evidence regarding nature and extent of damage, and the contribution to any damage of other factors, such as local sources of pollution from motor vehicle emissions, regional oil refining, and human occupation of historic sites). [18] Fifth instalment F4 report, paras 211-214 (no compensation for Iran’s claim for damage to marine resources because evidence was not sufficient to determine proportion of damage attributable to Iraq’s invasion and occupation of Kuwait).