IV. Adawa is entitled to compensatory damages.

 Compensatory damages are a proper remedy for financial harm caused to

members in disputes before the ICJ.

Several articles have been written criticizing compensation as an

implementation procedure in the DSU.1 We may have claimed that monetary remedy
is “not typically awarded by WTO Panels,”2 but it cannot be denied that throughout
the GATT period, compensation has been indeed awarded by panels to financially
harmed Members.3 Assuming arguendo that the WTO indeed has jurisdiction over the
case, it even supports the argument that although not typically awarded by panels,
compensation, as a matter of practice, has been used to compel compliance from
respondent Members.4 The primary reason for this is when it comes to the matter on
compensation no other legal basis is attributable but state responsibility. 5 Where a
State is found to have committed an internationally wrongful act, it would be
obligated to “a) discontinue the act and restore the situation to the status quo ante; b)
apply remedies provided under its internal law (if they exist) and to pay appropriate
compensation if restoration of the pre-existing status is impossible; and c) provide
guarantees that the act will not recur.”6 Moreover, "Failure of a state to respond in
good faith to a request for negotiation may itself constitute a breach of an
international obligation."7 Even further, leading jurist Ian Brownlie declared that
“attribution” is a matter of conduct and not of intent. This means that regardless of the
absence of bad faith (dolus molus) on the part of a party enforcing a questioned
conduct it shall be accountable for all effects of such act.

1Mercurio, B. Why compensation cannot replace trade retaliation in the WTO dispute settlement understanding.
World Trade Review, 8:2,1–2 4. 2009.

2 Compromis, 57.

3 United States–Measures Affecting Imports of Softwood Lumber from Canada, 41 B.I.S.D. 413–15 (1993).

4 Ibid.

5Arzt, D. The Right to Compensation: Basic Principles under International Law. Compensation as Part of A
Comprehensive Solution to The Palestinian Refugee Problem. 1999.

6 Restatement Sec. 902, Official Comment f.

7 Ibid.
 Basic also is the principle of international law that, according to Blackstone
and Grotius, “where there is a legal right, there is also a legal remedy or action at law
whenever that right is invaded.” This explains the apparent obligation of states to
make restitution for their wrongful acts. It is, thus, a function of the ICJ to determine
the extent of remedies available to injured state parties to particular disputes such as
compensation, in line with the role to “undo the effect of the violation.”8 The ICJ did
so in, among others, the Chorzow Factory, stating that “Reparation must, as far as
possible, wipe out all the consequences of the illegal act and reestablish the situation
which would, in all probability, have existed if that act had not been committed;” that
this could be done through "payment of a sum corresponding to the value which a
restitution in kind would bear," and "the award, if need be, of damages for loss
sustained which would not be recovered by restitution in kind or payment in place of
it (e.g. lost profits).”9 The existence of the “Hull Formula” and also the “Calvo
doctrine”, which was affirmed by the UN General Assembly in its Charter of
Economic Rights and Duties of States, also supports the propriety of compensation as
an effective remedy to financially harmed state parties.

In the instant case, Adawa formally requested a panel meeting pursuant to

Article 6.2 of the DSU with Rasasa10, however, negotiations failed to settle the matter.
With no plans on the part of Rasasa of withdrawing its imposition of the tariffs, in
improper application of the security clause, and consequently in breach of its
international obligation by causing actual financial harm11, Rasasa must pay Adawa
compensation in the form of damages.

8Restatement Sec. 901, Official Comment d. International tribunals are given wide latitude to develop and shape
remedies. Id. See generally Hugo Grotius, De Jure Belli Ac Pacis Libri Tres 12 (1625, English trans. by Francis
Kelsey, 1949); Marbury v. Madison, 5 U.S. (Cranch) 137, 163 (1803), quoting William Blackstone's Law
Commentaries; and Theo Van Boven, Study Concerning the Right to Restitution, Compensation and
Rehabilitation for Victims of Gross Violations of Human Rights and Fundamental Freedoms: Preliminary Report,
UN Doc. E/CN.4/Sub.2/1990/10. See Article 36(2)(d) of the Statute of the International Court of Justice.

9 Chorzow Factory Case (Germany v. Poland), 1928 PCIJ (Ser. A) No. 17 (Judgment of Sept. 13, 1928).

10 Compromis, 47.

11 Compromis, 57.