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World Court Digest

I. Substantive International Law - First Part
1.1. Good Faith

¤ Elettronica Sicula S.p.A. (ELSI)
Judgment of 20 July 1989
I.C.J. Reports 1989, p. 15

[pp. 76-77] Arbitrariness is not so much something opposed to a rule of law, as something opposed to the rule of law. This idea was expressed by the Court in the Asylum case, when it spoke of "arbitrary action" being "substituted for the rule of law" (Asylum, Judgment, l.C.J. Reports 1950, p. 284). It is a wilful disregard of due process of law, an act which shocks, or at least surprises, a sense of juridical propriety. Nothing in the decision of the Prefect, or in the judgment of the Court of Appeal of Palermo, conveys any indication that the requisition order of the Mayor was to be regarded in that light.
The United States argument is not of course based solely on the findings of the Prefect or of the local courts. United States counsel felt able to describe the requisition generally as being an "unreasonable or capricious exercise of authority". Yet one must remember the situation in Palermo at the moment of the requisition, with the threatened sudden unemployment of some 800 workers at one factory. It cannot be said to have been unreasonable or merely capricious for the Mayor to seek to use the powers conferred on him by the law in an attempt to do something about a difficult and distressing situation. Moreover, if one looks at the requisition order itself, one finds an instrument which in its terms recites not only the reasons for its being made but also the provisions of the law on which it is based: one finds that, although later annulled by the Prefect because "the intended purpose of the requisition could not in practice be achieved by the order itself" (paragraph 125 above), it was nonetheless within the competence of the Mayor of Palermo, according to the very provisions of the law cited in it; one finds the Court of Appeal of Palermo, which did not differ from the conclusion that the requisition was intra vires, ruling that it was unlawful as falling into the recognized category of administrative law of acts of "eccesso di potere". Furthermore, here was an act belonging to a category of public acts from which appeal on juridical grounds was provided in law (and indeed in the event used, not without success). Thus, the Mayor's order was consciously made in the context of an operating system of law and of appropriate remedies of appeal, and treated as such by the superior administrative authority and the local courts. These are not at all the marks of an "arbitrary" act.
The Chamber does not, therefore, see in the requisition a measure which could reasonably be said to earn the qualification "arbitrary", as it is employed in Article I of the Supplementary Agreement. Accordingly, there was no violation of that Article.

[pp. 114-115 D.O. Schwebel] It has, it is believed, been shown in the foregoing section that the measure of requisition was unreasonable and capricious since, cumulatively:

  • the legal bases on which the Mayor's order relied were justified only in theory;
  • the order was incapable of achieving its purported purposes;
  • the order did not achieve its purported purposes;
  • the order, issued, as it specified, "also" because "the local press is taking a very great interest in the situation and... the press is being very critical toward the authorities and is accusing them of indifference to this serious civic problem", was in part designed to give an impression of the Mayor confronting the problem "in one way or another", rather than prescribing a measure which could have been responsive to the problem;
  • the order accordingly was not simply unlawful but "a typical case of excess of power";
  • a paramount purpose of the requisition was to prevent the liquidation of ELSI's assets by ELSI, a purpose pursued without regard to treaty obligations of contrary tenor (and the Treaty's obligations, Italy maintains, bound it not only externally but were self-executing internally);
  • the Mayor transgressed the terms of his own order by failing to issue a decree for indemnification for the requisition and by failing to offer or pay that indemnification.

By its nature, what is unreasonable or capricious is subject in a given instance to a range of appreciation; these are terms which, while having a sense in customary international law, have no invariable, plain meaning but which are capable of application only in the particular context of the facts of a case. Given the facts of this case, it is concluded, for the reasons stated, that the order of requisition as motivated, issued and implemented was unreasonable and capricious and hence arbitrary.