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Certain activities carried out Nicaragua in the border area (Costa Rica v Nicaragua); Compensation owed by the Republic of Nicaragua to the Republic of Costa Rica

2 February 2018 at 7:12 am

International Court of Justice

General List No. 150

Date: 2 February 2018

Present: President Abraham; Vice-President Yusuf; Judges Owada, Tomka, Bennouna, Cancado Trindade, Greenwood, Xue, Donoghue, Gaja, Sebutinde, Bhandari, Robinson, Gevorgian; Judges ad hoc Guillaume, Dugard; Registrar Couvreur

On 16 December 2015, the International Court of Justice (ICJ) handed down a judgment in a dispute between Nicaragua and Costa Rica regarding the construction of three channels by Nicaragua and military presence in disputed territory on the border between the Nicaragua and Costa Rica. The ICJ held that Costa Rica had sovereignty over the disputed territory. In the same judgement, the ICJ found that Nicaragua had the obligation to compensate Costa Rica for material damages caused by Nicaragua’s unlawful activities on Costa Rican territory, which included damage to Costa Rica’s rain forests and water resources.  With respect to the question of compensation owed by Nicaragua to Costa Rica, the Court decided that failing agreement between the Parties on this matter within 12 months from the date of the judgment, this question would, at the request of one of the Parties, be settled by the Court.

As no agreement could be reached between the Parties, the ICJ was called upon to adjudicate the dispute about the quantum. The ICJ found that the environmental damage is compensable under international law, but did not prescribe a specific method for the calculation of the quantum of damages. It stated that it will decide the methodology taking into account the specific circumstances and characteristics of each case.

It did however find that compensation may include indemnification for the impairment or loss of environmental goods and services in the period prior to recovery and payment for the restoration of the damaged environment.

According to the Court, the valuation of environmental damage must be approached from the perspective of the ecosystem as a whole, by adopting an overall assessment of the impairment or loss of environmental goods and services prior to recovery, rather than attributing values to specific categories of environmental goods and services and estimating recovery periods for each of them. Such an overall valuation will allow the Court to take into account the capacity of the damaged area for natural regeneration.

The Court found that in this case, Costa Rica suffered damages in the amount of US$120 000. It however also found that Costa Rica was owed US$378,890.59 for expenses it incurred from remedial action it undertook in order to prevent irreparable prejudice to the environment. Costa Rica is further entitled to payment of pre-judgment interest on that sum  (from 16 December 2015 to 2 February 2018) in the amount of US$20,150.04.

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