Oaks Grow Strong in Contrary Winds: International Court Awards Compensation for Environmental Damage

In the first decision of its kind, the International Court of Justice (ICJ) has recently calculated monetary compensation for environmental damage. After finding that sovereignty over the territory at issue in a dispute between Costa Rica and Nicaragua belonged to Costa Rica, the ICJ ordered that Nicaragua must compensate Costa Rica for damage to the environment resulting from its unlawful activities on the territory.

Differing methodologies

In their submissions to the Court, each of the parties suggested very different methodologies for calculating compensation for environmental damage and, consequently, came to significantly different conclusions as to the amount of compensation owed. However, the Court ultimately developed its own methodology, drawing on elements of the approaches put forward by the parties. In doing so, the ICJ placed an emphasis on adopting a holistic approach. It decided to value environmental damage from the perspective of the ecosystem as a whole “by adopting an overall assessment of the impairment or loss of environmental goods and services” [78].

Groundbreaking but enigmatic

The Court’s reasoning behind its choice of methodology is progressive, opaque, and at times contradictory. It was keen to adopt an approach that accounted for the direct causal link between the activities of Nicaragua and the harm caused to environmental goods and services. Furthermore, the ICJ considered its approach was more appropriate to the specific characteristics of the area affected and an overall valuation allowed the Court to take into account the capacity of the damaged area for natural regeneration.

While there are shortcomings in the approach adopted by the Court, it is significant that the ICJ found environmental damage itself to be compensable under international law, particularly in light of the present hostile climate around matters of the environment.

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To find out more, this is the subject of a forthcoming piece that Dr. Jason Rudall has published in the American Journal of International Law, which will shortly be available at https://www.asil.org/resources/american-journal-international-law