CASE CONCERNING THE AUDITING OF ACCOUNTS
THE KINGDOM OF THE NETHERLANDS AND
THE FRENCH REPUBLIC PURSUANT TO THE ADDITIONAL PROTOCOL OF 25 SEPTEMBER 1991 TO THE CONVENTION ON THE PROTECTION OF THE RHINE AGAINST POLLUTION BY CHLORIDES OF 3 DECEMBER 1976
ARBITRAL AWARD OF 12 MARCH 2004
Unofficial English Translation
Additional Protocol of 25 September 1991 to the Convention of 3 December 1976 on the Protection of the Rhine against Pollution by Chlorides – Annex B to the Convention, on Arbitration – Annex III to the Additional Protocol, on “Financial Arrangements”.
Final auditing of accounts for the storage and removal from storage of residual salts on French territory – Dispute between the Parties as to the interpretation of point 4.2.1 of Annex III to the Additional Protocol on the auditing of accounts – Argument of the Netherlands that running costs must be calculated on the fixed basis of 61.5 French francs per ton of residual salts stored – Argument of France that the said costs must be calculated on the basis of actual costs per unit.
Interpretation of treaties in accordance with international law – Articles 31 and 32 of the Vienna Convention on the Law of Treaties – Customary nature of these provisions.
Constituent elements of the rule in Article 31 of the Vienna Convention making an integral whole – Importance of one element of the rule in relation to the others depends on the particular case – Intention and common will of the parties to be sought objectively and rationally starting from the text – Notion of “text of the treaty” distinct from, and broader than, that of “terms” – Ordinary and particular meaning of terms.
Good faith – Fundamental nature of principle of good faith in treaty interpretation – No reason in this respect to doubt the interpretations put forward by France and the Netherlands.
Point 4.2.1 providing that the accounts shall be audited by “comparing the actual expenditure, calculated according to the conditions specified in points 1.2.3, 1.2.4, and 1.2.6” with the spending limits – Point 1.2.6 referring to a rate of “61.5 French francs … per ton stored” – Ordinary meaning of the terms favours the interpretation of the Netherlands – Phrase “payments are not payments in full discharge” does not support the French position – Meaning of the term “comparaison” and the term “difference” used in point 3.2.3 of Annex III – Meaning of the expressions “depenses engagees” and “depenses effectuees “. Arguments of France on these points not upheld.
Context of point 4.2.1 – Other provisions of the Protocol – Article 4 of the Protocol not conclusive as to whether the audit must be based on 61.5 French francs or on actual costs – Other elements of the context – Declaration of the Heads of Delegation made on 25 September 1991 of limited usefulness.
Object and purpose of the Protocol – Joint nature of the system chosen by the Parties for implementation of the Protocol – Joint financing of the steps to be taken by France and the Netherlands – Identification of the object and purpose leaves open the question of how this financing was to function.
Subsequent practice in implementing the Protocol – Annual reports and provisional balance sheet at the end of 1996, prepared by France, showing the existence of a common practice and agreement as to the interpretation of point 3.2.2 of Annex III alone – Cessation of payments by Switzerland and Germany not determinative as between France and the Netherlands.
Relevant rule of international law applicable to relations between France and the Netherlands – Principle that “polluter pays” not used in Additional Protocol and not part of general international law – Geographical situation of the Netherlands of no relevance.
Resort to supplementary methods referred to in Article 32 of the Vienna Convention in the interpretation process – Analysis of preparatory works showing how the amount of 61.5 French francs was calculated using both fixed and variable elements but adopted by the Parties as a lump sum.
Calculation of final auditing – Determination of surplus amount paid to France – Calculation of interest due up to 31 December 1998 in accordance with point 3.2.3 of Annex III – Calculation of interest falling due after 31 December 1998 – Distinction between storage expenditures and expenditures on removal from storage – Cost overruns for removal from storage resulting from increase in prices after 1998.
THE TRIBUNAL, COMPOSED OF:
HE. KRZYSZTOF SKUBISZEWSKI, President, H E. PIETER KOOIJMANS, Member, H.E. GILBERT GUILLAUME, Member, Ms. ANNE WALLEMACQ, Registrar,
Renders the following Arbitral Award:
Chapter I – Introduction
1. Following negotiations held within the framework of the International Commission for the Protection of the Rhine against Pollution (hereinafter called the “ICPR”), the governments of the French Republic, the Federal Republic of Germany, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands and the Swiss Confederation (hereinafter respectively called “France”, “Germany”, “Luxembourg”, “the Netherlands” and “Switzerland”) signed the Convention on the Protection of the Rhine against Pollution by Chlorides (hereinafter called the “Convention”) on 3 December 1976 in Bonn. The Convention was amended in 1983 by an exchange of letters initiated by France. Those amendments are not relevant to the present case. On 25 September 1991, in Brussels, the Contracting Parties signed the Additional Protocol to the Convention (hereinafter called the “Protocol”).
The objective of the Convention, as set out in Article 1, is to combat the pollution of the Rhine by chlorides. To do this, the Contracting Parties undertook to strengthen their cooperation. The objectives of the Protocol, as defined in its Preamble, are to improve the quality of the waters of the Rhine, facilitate the supply of drinking water from the Rhine and the IJsselmeer, and reach a definitive solution to the problem of reducing chloride concentrations in the Rhine.
2. The Convention provided that France must reduce discharges of chlorides from the Alsace Potassium Mines in two phases. The first phase consisted of reducing discharges into the Rhine by 20 kgs of chloride ions per second. In the second phase, in addition to the reduction of 20 kgs already achieved, France was to reduce chloride discharges by 40 kgs per second. These provisions were amended by the Protocol, under which measures were to be taken:
– in French territory, to reduce chloride discharges and temporarily store the resulting chlorides on land when chloride concentration in the Rhine at the German-Netherlands border exceeded 200 mg/l; and
– in Netherlands territory, to limit chloride concentrations in the waters of the IJsselmeer by discharging the briny waters from the Wieringermeer polder previously discharged into the IJsselmeer into the Waddenzee.
3. The Protocol provided that the financing of these measures was to be apportioned as follows: 30% was to be borne by France, 30% by Germany, 34% by the Netherlands and 6% by Switzerland. The parties agreed on maximum expenditures of 400 million French francs for the 1991-1998 period for the measures to be taken in France, including the costs of investment – which were themselves limited to 40 million French francs – and running costs for storage and removal from storage of the chlorides. That amount constituted a spending limit beyond which France was released from its storage obligations.
4. A dispute arose between the Netherlands and France concerning the interpretation and implementation of the Protocol. Pursuant to Article 13 of the Convention, reproduced in Article 7 of the Protocol, “[a]ny dispute between the Contracting Parties relating to the interpretation or implementation of this Convention which cannot be settled by negotiation shall, unless the Parties to the dispute decide otherwise, be submitted, at the request of one of the Parties, to arbitration in accordance with the provisions of Annex B. The latter … forms an integral part of this Convention”. Annex B, entitled “Arbitration”, lays down the composition and constitution of the Arbitral Tribunal and the process by which it must reach its decision, and provides that, with respect to other aspects of the proceedings, the Arbitral Tribunal shall establish its own rules of procedure. The dispute referred to above could not be settled by negotiation.
Chapter II – Procedural History
5. On 21 October 1999, the Netherlands sent a note verbale from its Embassy in Paris to the French Ministry of Foreign Affairs requesting that, pursuant to Article 13 of the Convention and Article 7 of the Protocol, the dispute between them concerning:
the amount to be repaid by the French Republic to the Kingdom of the Netherlands
under the final auditing of accounts which was to take place not later than
31 December 1998 as provided in paragraph 4.2.1 of Annex III to the Additional
be submitted to arbitration.
In its note verbale, the Netherlands stated its intention to appoint an arbitrator within two months of the date France received the note verbale containing the request, in accordance with the provisions of Annex B to the Convention, and invited the French authorities to appoint an arbitrator within the same two-month period in order that the two arbitrators thus appointed could by mutual agreement designate a third arbitrator, who would be President of the Arbitral Tribunal.
6. By a note verbale from its Embassy in Paris dated 17 December 1999, the Netherlands informed the French Ministry of Foreign Affairs that it had appointed as arbitrator Mr. Pieter H. Kooijmans, Judge of the International Court of Justice.
7. By a note verbale dated 17 December 1999 from its Ministry of Foreign Affairs, France informed the Embassy of the Netherlands in Paris that it had taken note of the Netherlands’ request for arbitration, and had appointed as arbitrator Mr. Gilbert Guillaume, Judge of the International Court of Justice.
8. The two arbitrators thus appointed chose as the third arbitrator, by mutual agreement, Mr. Krzysztof Skubiszewski, President of the Iran-United States Claims Tribunal, who on 1 February 2000 agreed to serve as President of the Netherlands-France Arbitral Tribunal (hereinafter called the “Tribunal”).
9. On 21 June 2000, the duly constituted Tribunal held, in consultation with the Parties, a meeting at the Peace Palace in The Hague. At that meeting, the Tribunal adopted its Rules of Procedure and proposed that the International Bureau of the Permanent Court of Arbitration (hereinafter called the “PCA”) should serve as the Registry of the Tribunal, and that Ms. Bette E. Shifman should serve as Registrar.
10. The Netherlands having agreed on the same day to the appointment of the PCA as Registry and Ms. Bette E. Shifman as Registrar, and France having so agreed by letter of 1 July 2002, the Tribunal proceeded to make the said appointments. Pursuant to the Tribunal’s Rules of Procedure, all communications from or to the Tribunal from that date on, including all notifications and transmissions of documents, were dispatched through the intermediary of the Registry.
11. In accordance with the Rules of Procedure, France informed the Tribunal by letter dated 12 July 2000 that it had appointed as its Agent Mr. Ronny Abraham, Director of Legal Affairs at the Ministry of Foreign Affairs. The Netherlands informed the Tribunal by letter dated 20 July 2000 that it had appointed as its Agent Mr. Johan G. Lammers, Legal Adviser to the Ministry of Foreign Affairs.
12. By letters dated 4 August and 18 August 2000 respectively, the Netherlands and France informed the Tribunal that they had agreed to submit to it the following question:
Taking into account all relevant provisions of the Additional Protocol to the Convention of 3 December 1976 on the Protection of the Rhine against Pollution by Chlorides and its Annexes, interpreted in accordance with international law, what is the sum that must be transferred between the Parties to the dispute in order that the accounts be audited pursuant to point 4.2.1 of Annex III to the said Protocol?
13. In accordance with the timetable set forth in the Tribunal’s Rules of Procedure, the Netherlands filed its Memorial on 28 February 2001. France filed its Counter-Memorial on 12 September 2001, after which the Netherlands filed its Reply on 11 January 2002. The Rejoinder of France was filed with the Registry on 8 April 2002, thus concluding the written phase of the proceedings.
14. Following the resignation of the Registrar, the Tribunal appointed, at the suggestion of the Secretary-General of the International Bureau of the PCA and after consulting the Parties, Ms. Anne Wallemacq as its Registrar, with effect from 1 July 2002. On 24 July 2002, Ms. Catherine Cisse was appointed as Assistant Registrar.
15. Following inquiries as to the Parties’ intentions with respect to a possible oral phase of proceedings, the Parties informed the Registrar, by letters dated 16 April and 20 May 2002, that after consultation they were unable to reach an agreement on whether the proceedings should consist only of a written phase, as allowed by the Tribunal’s Rules of Procedure.
16. Consequently, and in accordance with the Rules of Procedure, a hearing was held in closed session on 3 October 2002, at the International Conference Centre in Paris. At that hearing, oral arguments and arguments in reply were submitted, with the benefit of simultaneous interpretation, by:
For the Netherlands: Mr. Johan G. Lammers, Legal Adviser, Ministry of Foreign Affairs;
Ms. Ineke van Bladel, Senior Lawyer, Ministry of Foreign Affairs; Mr. Robert H. Dekker, Director of International Water Policy, Ministry of Transport, Public Works and Water Management, and Head of the Netherlands delegation to the ICPR;
For France: Mr. Ronny Abraham, Director of Legal Affairs, Ministry of Foreign
Professor Serge Sur, Adviser to the French Government.
Other members of the French delegation were:
Mr Besozzi, Rhine-Meuse Water Agency; Ms. Isidoro, Ministry of Foreign Affairs; Mr. Rulleau, Alsace Potassium Mines;
Ms. Taon, Legal Department, Ministry for Sustainable Development and Ecology;
Mr. Vincent, Ministry of the Economy, Finance and Industry.
Each of the Parties filed a note of its oral arguments at the hearings and presented documents that had not previously been produced. The Netherlands submitted a document entitled “Report to the ICPR on the technical aspects, costs and financial arrangements of the plan presented by the Netherlands with the agreement of France as an alternative to the measures envisaged for implementing the Chlorides Convention”, bearing the typewritten classification number C 2/90 rev. 21.03.90 and the handwritten classification number DELch 4/90 (hereinafter called document “DELch 4/90”), a document entitled “Record of Decisions of the 47th Meeting of the Heads of Delegation held at Haarlem on 4 May 1990”, bearing the handwritten classification number PLEN 1/90 (hereinafter called document “PLEN 1/90”), and a document entitled “Record of the Decisions of the 56th Plenary Meeting of the ICPR held on 2 July 1991 at Lenzbourg (Switzerland)”, bearing the classification number PLEN 30/91 (hereinafter referred to as document “PLEN 30/91”). France submitted a document entitled “Cost evaluation for the implementation of adjusted temporary storage in France with effect from 1 January 1991”, bearing the date 10 September 1990 and the handwritten classification number C 8/90 (hereinafter called document “C 8/90-Fr”), a document entitled “Note on the costs of implementation in France of the 1991 Additional Protocol to the Chlorides Convention”, bearing the date 24 March 1997 (hereinafter called the “Note on costs”) and a document entitled “Bonn Convention 2nd Phase – expenditures calculated in F 88” comprising three tables (hereinafter called “Bonn Convention – expenditures calculated in F 88”). After consulting the Parties, and since they had no objections, the Tribunal decided that the said documents would be included in the record. The Members of the Tribunal put questions to the Parties following a plan agreed by the Parties, and the Parties replied to these questions.
17. On 23 October 2002, the Netherlands presented to the Registry a document entitled “Calculation Note on the implementation in France of the Additional Protocol to the Chlorides Convention” (hereinafter called the “Calculation Note”), to which the Netherlands delegation had referred at the hearing but not produced. On 6 November 2002, the Netherlands presented two other new documents to the Registry. The first of these was a letter dated 14 March 1990 from the Director of the ICPR, bearing the reference 7945/90, which was the covering letter for the preliminary draft of a report summarising the Franco-Dutch alternative for implementing the second phase of the Convention on the Protection of the Rhine from Pollution by Chlorides, bearing the classification number C 8/90, only the title page of which was attached (hereinafter called the “Covering letter of 14 March 1990”). The second document was entitled “Record of Decisions of the Working Group on Chlorides, held on 20 and 21.03.90 in Koblenz”, bearing the classification number C 11/90 (hereinafter called document “C 11/90”).
18. Having invited France to provide its views on these submissions, the Tribunal issued Order No. 1 on 4 December 2002, based on its Rules of Procedure, authorising the production of the documents presented by the Netherlands and requesting the Parties to explain to it, by 7 January 2003, why the same classification number, C 8/90, appeared on two different documents, one submitted by France at the hearing and the other submitted by the Netherlands on 6 November 2002. The Tribunal further asked the Netherlands to submit to it, no later than 7 January 2003, the text and annexes of the above-mentioned preliminary draft report, and asked France to provide, within the same time period, all additional details concerning the circulation and discussion within the Working Group on Chlorides of the document C 8/90 it had submitted at the hearing.
19. By a letter dated 30 December 2002, France requested an extension by ten days of the time limit for providing the explanations requested by the Tribunal in Order No. 1. By a letter dated 6 January 2003, the Netherlands filed its replies to the questions put by the Tribunal in Order No. 1, together with the relevant annexes, including the “Report of the Working Group on Chlorides on the alternative Franco-Dutch plan for the implementation of the second phase of the Chlorides Convention” dated March 1990 and bearing the classification number C 8/90 (hereinafter called document “C 8/90-Nl”), without its annexes, and stated that it had no objection to France being granted a ten day extension. By Order No. 2 of 8 January 2003, the Tribunal granted France a ten day extension, until 17 January 2003, to provide the explanations requested in Order No. 1.
20. France duly delivered its reply within the extended time limit. Annexed to its reply, France submitted the following documents: a document entitled “Temporary storage of salt at the MPDA (Alsace Potassium Mines) during periods of heavy Cl concentration in the Rhine – Technical and Economic Study”, dated 13 November 1989 and marked C 10/89 (hereinafter called document “C 10/89”), a document entitled “Efficiency and cost of various scenarios for regulating the retention of residual salts by French potassium mines – documentation for the Ministerial Conference of States Bordering the Rhine of 30 November
1989 in Brussels”, dated November 1989 and marked C 11/89 (hereinafter called document “C 11/89”), a document entitled “Report to the ICPR on the technical aspects, costs and financial arrangements of the plan put forward by the Netherlands by agreement with France for the implementation of the second phase of the Chlorides Convention”, dated 1 March
1990 and bearing the handwritten classification number C 2/90 (hereinafter called document “C 2/90”), a document entitled “Draft: – Declaration of the Heads of Delegation of the Governments Parties to the Agreement on the International Commission for the Protection of the Rhine against Pollution”, bearing the handwritten classification number DELch 12/90 (hereinafter called document “DELch 12/90”), and its annex entitled “Explanatory Note by the French Delegation on Item 5 of the draft Declaration by the Heads of Delegation”, a document entitled “Dutch Draft Proposal for the subsequent implementation of the Convention on the Protection of the Rhine against Pollution by Chlorides”, dated 14 July 1989 and bearing the classification number DELch 17/89 (hereinafter called document “DELch 17/89”), and a document entitled “Studies for the Bonn Convention Second Phase – Temporary storage of residual salts near the Mines”, dated August 1987 (hereinafter called the “1987 Studies”).
21. By the above-mentioned letter of 6 January 2003, the Netherlands asked the Tribunal for leave to comment on France’s reply to the questions in Order No. 1, in particular the submission of new documents by France.
22. By Order No. 3 of 27 January 2003, having confirmed on the one hand that each Party had the right to present its case in full, and recalling on the other that the leave granted to them during and after the hearing to present new documents, and the questions put by the Tribunal in Order No. 1, were not to result in a de facto reopening of the record, the Tribunal authorised each Party, if it so wished, to submit its observations on the other Party’s reply to Order No. 1, including the documents annexed to those replies, by no later than 17 February 2003.
23. In compliance with the terms of Order No. 3 of the Tribunal, France submitted its observations on the reply of the Netherlands by letter dated 31 January 2003, and the Netherlands submitted its observations on the French reply on 14 February 2003.
24. By Order No. 4 of 26 February 2003, the Tribunal requested that France provide it, by 31 March 2003, with answers to two questions concerning the document entitled “Provisional Balance Sheet as at the end of 1996 on the implementation in France of the 1991 Additional Protocol to the Chlorides Convention” contained in Annex 8 to the Memorial of the Netherlands (hereinafter called the “provisional balance sheet as at the end of 1996”). The Tribunal further requested the Netherlands to comment, if it so wished, on France’s replies within ten days of receiving them.
25. By letter dated 28 March 2003, France submitted its replies to the questions put by the Tribunal in Order No. 4. Stating that France’s replies were received on 31 March 2003, the Netherlands informed the Tribunal of its comments on France’s replies by letter of 9 April 2003.
26. By Order No. 5 of 24 September 2003, the Tribunal requested the Parties to consult together and provide it, by 10 October 2003, with the missing page – only the second page having been supplied – of the annual reports for the years 1994, 1995, 1996 and 1997 annexed to the Memorial of the Netherlands (see annexes 5.3, 5.4, 5.5 and 5.6). Recalling that, under Annex III to the Protocol, work was to continue up to December 1998 and France was bound to submit information as to the quantities stored and the related costs each year, the Tribunal requested the Parties to provide it with the annual report for the year 1998, which the Parties had not produced. The Tribunal also requested France to provide it, by 10 October 2003, with any information useful in determining the applicable interest rate that was to replace the Credit national rate. Finally, having found that no indication had been given as to the coefficients of price increases to be applied for the period after 31 December 1998, the Tribunal requested France to provide it, within the same time period, with any information useful in determining the coefficients of price increases applicable after that date.
27. After consulting with the Netherlands, France sent the Tribunal the documents requested by letter dated 9 October 2003, in which it suggested that the Tribunal should replace the Credit national rate not by the T 4 M rate, as it had suggested in its Counter- Memorial, since that was a short term rate, but rather by the borrowing rate on French 10-year State bonds. Annexed to its reply, France submitted the annual reports for the years 1994 to 1998 in their entirety, a table showing the progression in the borrowing rate on French 10- year State bonds between 1991 and 2002, and a table summarising the annual progression in the price index from 1988 to 1992.
28. With reference to the above-mentioned reply of France, and acting at the Tribunal’s request, the Registrar, by letter of 12 November 2003, requested that France provide her with any information useful in determining the rate of interest for the year 2003.
29. By letter of 18 November 2003, France sent the Tribunal a table summarising the progression of the borrowing rate on French 10-year State bonds for the months of January to October 2003, explaining that these were average monthly rates.
30. At the Tribunal’s request, by letter of 3 December 2003, the Registrar requested France to provide her, as soon as possible, with the study carried out in April 1988 referred to in document C 10/89 annexed to France’s reply to the Tribunal’s Order No. 1, as well as the definitive rate of interest for the year 2003. In response to this request, France sent a letter to the Tribunal on 15 December 2003 enclosing the 1987 Studies, explaining that, while that document had been compiled in August 1987, the amounts shown in it had been updated in April 1988, though this did not appear on the face of the document. As to the definitive rate of interest for the year 2003, France stated that it would communicate this information at the beginning of January 2004, and it did so by letter on 9 January 2004.
Chapter III – The Arguments of the Parties
1. The Netherlands
31. The Netherlands contends that the question put to the Tribunal must be examined on the basis of the principles of international law on the interpretation of treaties, which are expressed in Article 31 of the Vienna Convention on the Law of Treaties of 23 May 1969 (hereinafter called “the Vienna Convention”). This means that the interpretation must be made in good faith, following the ordinary meaning of the terms in their context and in the light of the object and purpose of the Protocol. The Netherlands points out that the examination should not proceed on the basis of Article 32 of the Vienna Convention unless, after an examination under the rule laid down in Article 31, the meaning remains ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable.
32. The Netherlands recalls, first, that under point 4.2.1 of Annex III to the Protocol:
4.2.1. For expenditure in French territory, payments are not payments in full discharge, and the accounts shall be audited by 31 December 1998 at the latest by comparing the actual expenditure, calculated according to the conditions specified in points 1.2.3, 1.2.4 and 1.2.6 above, with the spending limit set out in point 2 above, increased by any amount carried over pursuant to point 3.2.3 above. In the event that actual expenditure by France is less than the amount referred to in point 1.2, France undertakes to return the surplus received plus 11/12 of the yearly interest on this amount at the annual long-term interest rate on national loans. In this connection, the rate of price rises shall also be taken into account.
It adds that under point 1.2.6 of Annex III:
1.2.6. Each year, France shall be released from its storage obligations once the expenditure in that year has reached the spending limit as determined by point 2 and point 3.2.3. For this purpose, the running costs for France shall be calculated at a rate of 61.5 French francs (1988 French francs adjusted for inflation) per ton stored. For the first year, investment costs shall be added on (40 million 1988 French francs adjusted for inflation).
33. In the view of the Netherlands, the passages in point 4.2.1 that are particularly important in answering the question before the Tribunal are those mentioning “the actual expenditure, calculated according to the conditions specified in points 1.2.3, 1.2.4 and 1.2.6”, “11/12 of the yearly interest on this amount at the annual long-term interest rate on national loans”, and “the rate of price rises” [“rate of inflation”]. In calculating the expenditures, the interest and the rate of inflation, points 4.2.1, 1.2.6 and 1.2.1 are relevant for the expenditures, points 4.2.1 and 3.2.3 for the interest, and 4.2.1 for the rate of inflation.
34. According to the Netherlands, the “ordinary meaning to be given to the terms of a treaty in their context” referred to in Article 31 of the Vienna Convention implies that the “expenditures”, “interest” and “rate of price rises” mentioned in point 4.2.1 must be calculated as set out below.
35. Expenditures, in the meaning of point 4.2.1, comprise the investment costs set at 40 million French francs (1988 French francs adjusted for inflation), an amount which is not in dispute, and the running costs. The running costs, pursuant to point 1.2.1, comprise the costs of storage and removal from storage. Given the relationship between the first and second sentences of point 4.2.1 on the one hand, and point 1.2.6, to which point 4.2.1 expressly refers, on the other, the running costs must be calculated by multiplying the quantities of chlorides actually stored by 61.5 French francs per ton (1988 French francs adjusted for inflation). In other words, the method indicated in the second sentence of point 1.2.6 is meant not only to enable the amount of the expenditures referred to in the first sentence of that paragraph to be calculated, but also to enable the calculation of expenditures by France in the context of the final auditing of accounts. The Netherlands emphasises, moreover, that the French interpretation amounts to breaking down the amount of 61.5 French francs into fixed costs, which must be multiplied by 4.55 million tons of chlorides, and into variable costs, which must be multiplied by the quantity of chlorides actually stored. Thus, the amount of the fixed costs that France could have charged to the other Parties could have been determined as early as 1991. The fact that no such determination was made argues in favour of the Netherlands’ interpretation.
The Netherlands disputes France’s contention that the notions of “depenses engagees” as used in the first sentence of point 4.2.1 and “depenses effectuees” as used in the second sentence are capable of two different meanings. It draws attention to the fact that the expression “depenses effectuees”, which according to France’s argument refers to actual expenditures, also appears in point 1.2.6, which relates to calculations and carry-overs that are not to be done on the basis of actual costs. Furthermore, the French interpretation would mean giving a specific meaning to the term “depenses” [expenditures], because, according to France, only the actual expenditures of France could be taken into consideration. Finally, in reply to the argument of France that, for the Wierengermeer project, the Netherlands conducted the final audit referred to in point 4.1.1 on the basis of actual expenditures, the Netherlands contends that the Parties had reached agreements on the measures to be taken and the auditing of the accounts by France as well as the Netherlands, and that there is no inconsistency between the provisions of points 4.1.1 and 4.1.2.
In response to the argument of France derived from the use of the term “a cette fin” [“for this purpose”] in point 1.2.6, the Netherlands points out that this expression does not appear in the Dutch or German texts. Referring in this regard to Article 33, paragraph 3, of the Vienna Convention, according to which the terms of a treaty are presumed to have the same meaning in each authentic text, it concludes that the French, Dutch and German texts confirm that its interpretation is correct, while France’s attempt to reconcile the texts when implementing the provision would be tantamount to making the French text prevail over the other two.
In response to the argument of France based on the use of the term “difference” [“difference”] in point 3.2.3 and of the term “comparaison” [“comparison”] in point 4.2.1, the Netherlands contends that the term “difference””, as it appears in point 3.2.3 dealing with carry-overs, is used correctly, as that point envisages a situation where the actual storage costs incurred are below the limit set for the year concerned. For this reason, according to the Netherlands, no link can be established between point 3.2.3 and the first sentence of point 4.2.1 which states that the accounts shall be audited by a “comparison” between the expenditures “calculated according to the conditions specified in points 1.2.3, 1.2.4 and 1.2.6” and “the spending limit set out in point 2”. Indeed, where the auditing is concerned, it is not possible in practice to start from the hypothesis that the said expenditures are below the spending limit indicated in point 2: there must first be a “comparison”. If it appears that the actual expenditures of France are below the amount shown in point 1.2, France will then be bound to return the surplus received (the “difference”).
36. The Netherlands goes on to argue that, pursuant to Article 31 of the Vienna Convention, a treaty must be interpreted “in the light of its object and purpose”, and that the Preamble to the Protocol is especially important in this regard. It contends that it is clear from the Preamble that the object and purpose of the Protocol are to improve the quality of the waters of the Rhine and facilitate the supply of drinking water. From this it deduces that its interpretation of the relevant terms of the Protocol in the light of their ordinary meaning is compatible with the object and purpose of the Protocol.
The Netherlands moreover denies having established a relationship between its geographical situation and the “polluter pays” principle, on the one hand, and the object and purpose of the Protocol on the other, or even the meaning that must be given to the terms of the Protocol. France is therefore incorrect, it claims, in alleging that the Netherlands was seeking to use those arguments to obtain preferential treatment.
37. Referring to paragraph 2 a) of Article 31 of the Vienna Convention, the Netherlands contends that the “Declaration of the Heads of Delegation of the Governments Parties to the Agreement on the International Commission for the Protection of the Rhine against Pollution” (hereinafter called the “Declaration of Heads of Delegation”), signed at the same time as the Protocol, must be considered as an “agreement” within the meaning of that paragraph, and that the said Declaration would not lead to any changes in the interpretation favoured by the Netherlands.
38. The Netherlands states that in the present case there is no “subsequent agreement between the parties” within the meaning of Article 31, paragraph 3 a) of the Vienna Convention. On the other hand, account has to be taken of the “subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation”, as referred to in paragraph 3 b) of Article 312 of the Vienna Convention. In this regard, the Netherlands emphasises that, in the annual reports submitted by France for the 1992-1997 period, the running costs are calculated by multiplying the quantities of chlorides stored by 61.5 French francs per ton. The interest rates applied in the annual reports are, with the exception of the 1997 rate, the annual long-term interest rates of the Credit national, also taking account of the rate of inflation. The Netherlands concludes from this that the undisputed approach of France in implementing its obligation to provide the information set out in Article 1, paragraph 2 of the Protocol and point 3.2.2 of Annex III to the Protocol must be considered as an additional argument in support of the correctness of its interpretation.
In addition, the Netherlands does not agree that the discussions that took place between the Parties to the Protocol regarding the final auditing can be described as “subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation”. According to the Netherlands, there was no such agreement in practice. Proof of this is to be found in these proceedings, the very object of which is to produce a final auditing. The Netherlands notes, in this regard, that Germany and Switzerland have taken the same view.
39. The Netherlands also maintains that the interpretation given by it to the calculation of expenditures, interest and the rate of inflation must be considered as an interpretation in good faith of point 4.2.1, point 1.2.6 read with point 1.2.1, and point 3.2.3 of Annex III to the Protocol. It observes that good faith is not an element that can be used after the event to deduce a different, autonomous meaning from the terms of the Convention.
40. The Netherlands goes on to analyse the preparatory works, making it clear at the outset that it does so for one reason only: that these works can, under Article 32 of the Vienna Convention, serve to confirm the meaning resulting from an application of Article 31.
The Netherlands disputes the relevance of document DELch C 2/90 annexed to the Rejoinder of France, which dates from the spring of 1990, in other words one and a half years before the Protocol was signed. The Netherlands further contends that the said document is incomplete, and that, contrary to what is claimed by France, it was a revised version of that document, headed DELch 4/90, that was discussed by the Heads of Delegation when they met on 4 May 1990. Moreover, as appears from the record of the decisions of that meeting, the revised document had been referred to the Working Groups on Chlorides and on Legal Affairs for their examination. Reference is made in this connection to document PLEN 1/90.
The Netherlands adds that one document that is, however, relevant to the case is document PLEN 30/91, which was drawn up at the end of the negotiations on the Protocol. Of particular importance is paragraph 8.2 of that document, entitled “Details concerning financial arrangements”, as well as Annex 4 to which paragraph 8.2 refers. According to the Netherlands, it appears from that document that France was to base the final auditing of the accounts on the calculation for the year 1998, in which, in line with the reports France had drawn up for the preceding years, the quantities of chlorides stored were multiplied by 61.5 French francs and the amounts carried over from previous years were taken into account. Furthermore, no distinction was made between fixed costs and variable costs. According to the Netherlands, this distinction was discussed for the first time in the ICPR coordination group, when France presented its provisional balance sheet as at the end of 1996, a document France does not dispute having put forward spontaneously, with no obligation. Furthermore, the Netherlands adds, it appears from this last document that certain items were in fact 45% lower than France had calculated. This finding raises the question of whether, in calculating the fixed costs, a 45% reduction for the dismantling of the installations should be factored in, insofar as this calculation is relevant.
The Netherlands also raises doubts as to whether the amount of 61.5 French francs was calculated by taking a hypothetical amount stored of 4.55 million tons, and referring back in this regard to the Calculation Note, from which it emerges that France requested facilities for only half that amount, namely 2.7 million tons.
As to document C 8/90 submitted by France at the hearing in support of its contention that the amount of 61.5 French francs must be broken down into fixed costs of storage and removal from storage, and variable costs of storage and removal from storage, the Netherlands maintains that the document does not form part of the “preparatory works” of the Protocol. Indeed, it was not produced by the ICPR but by a French body, and was discussed neither at the meeting of the Working Group on Chlorides on 13 September 1990 nor at the meeting of the Heads of Delegation on 31 October 1990. In support of this statement, the Netherlands presented another document also bearing the classification number C 8/90, which this time had been drafted within the framework of the ICPR. It explains, however, that this latter document was not discussed by the Working Group on Chlorides, nor was it part of the “preparatory works”.
The Netherlands points out that the documents C 10/89, C 11/89, C 2/90, DELch 12/90, DELch 17/89 and the 1987 Bonn Convention Studies, attached as annexes to France’s reply to the questions put by the Tribunal in Order No. 1, date from a very early stage of the negotiations and were not discussed in the Plenary Session as the possible basis of a decision. In other words, these were unilateral proposals from the Parties and discussion documents, the contents of which could not be taken to reflect the intentions of the Parties as to the interpretation of point 4.2.1 or other provisions of the Protocol or Annex III. As to the breakdown into fixed costs and variable costs, the Netherlands adds that while the Parties had necessarily talked about the cost structure required by the measures to be taken, this did not mean that they wanted that structure to be taken into consideration in the final auditing. France was therefore wrong to claim that the above-mentioned documents related to negotiations “leading to the adoption of the Protocol”.
The Netherlands also offers the following comments. The 1987 Studies formed part of an overall Plan for the execution of the second phase of the Convention, a plan which had been found unacceptable by the Parties, casting doubt on its value as part of the preparatory works. Moreover, it is of no avail to France to refer to paragraphs 51 to 54 of document C 10/89 to support its argument that a distinction must be drawn between fixed costs and variable costs. Those paragraphs do not in fact mention “fixed costs”, but rather proportionate expenditures, which are also called running costs to distinguish them from investment costs. Finally, the Netherlands emphasises that document C 2/90, on page 10 and page 3 of its Annex, refers to document C 12/89, which was not submitted by France, confirming the thesis of the Netherlands whereby the “actual expenditures” or “expenditures incurred” correspond to the costs mentioned by France i