804 international law
the normal sanction for non-performance of contractual obligations and
that it is inapplicable only to the extent that restoration of the status quo
ante is impossible.
165
This is an approach that in political terms, particularly in international
contract cases, is unlikely to prove acceptable to states since it appears a
violation of sovereignty. The problems, indeed, of enforcing such restitu-
tion awards against a recalcitrant state may be imagined.
166
The International Court noted in the Gabˇc´ıkovo–Nagymaros Project
(Hungary/Slovakia) case that it was a ‘well-established rule of interna-
tional law that an injured state is entitled to obtain compensation from
the state which has committed an internationally wrongful act for the
damage caused by it’.
167
Article 36(1) provides that in so far as damage
caused by an internationally wrongful act is not made good by restitu-
tion, the state responsible is under an obligation to give compensation.
168
Article 36(2) states that the compensation to be provided shall cover
any financially assessable damage including loss of profits in so far as
this is established.
169
The aim is to deal with economic losses actually
caused. Punitive or exemplary damages go beyond the concept of repara-
tion as such
170
and were indeed held in Ve l ´asquez Rodrigu´ez v. Honduras
165
17 ILM, 1978, p. 36; 53 ILR, pp. 507–8. In fact the parties settled the dispute by Libya
supplying $152 million worth of crude oil, 17 ILM, 1998, p. 2.
166
These points were explained by the arbitrator in the Liamco case, 20 ILM, 1981, pp. 1,
63–4; 62 ILR, pp. 141, 198. See also the Aminoil case, 21 ILM, 1982, p. 976; 66 ILR, p. 519.
See further e.g. A. Fatouros, ‘International Law and the International Contract’, 74 AJIL,
1980, p. 134. The issue of compensation for expropriated property is discussed further
below, p. 827.
167
ICJ Reports, 1997, pp. 7, 81; 116 ILR, p. 1. See also the Construction of a Wall case, ICJ
Reports, 2004, pp. 136, 198; 129 ILR, pp. 37, 117–18, and the Genocide Convention (Bosnia
v. Serbia) case, ICJ Reports, 2007, para. 460. In the latter case, the Court referred to article
36.
168
In the Gabˇc´ıkovo–Nagymaros Project case, ICJ Reports, 1997, pp. 7, 81; 116 ILR, p. 1, the
Court held that both states were entitled to claim and obliged to provide compensation.
Accordingly, the parties were called upon to renounce or cancel all financial claims and
counter-claims. See more generally D. Shelton, Remedies in International Human Rights
Law, 2nd edn, Oxford, 2005, and C. N. Brower and J. D. Brueschke, The Iran–United
States Claims Tribunal, The Hague, 1998, chapters 14–18.
169
See ILC Commentary 2001, p. 243. See also the Report of the International Law Com-
mission on the Work of its Forty-Fifth Session, A/48/10, p. 185.
170
See generally Whiteman, Damages, and Ar
´
echaga, ‘International Responsibility’, p. 571.
See also N. Jorgensen, ‘A Reappraisal of Punitive Damages in International Law’, 68 BYIL,
1997, p. 247; Yearbook of the ILC, 1956, vol. II, pp. 211–12, and Annacker, ‘Part Two’,
pp. 225 ff.