A Discussion on Procedural Justice under the Regime of The United Nations Compensation Commission (UNCC)

Jerry F. Xia

Erasmus University Rotterdam

Faculty of Law

2000.12

Website: http://www.angelfire.com/folk/jerry

I.  INTRODUCTION TO THE ISSUE: THE NATURE OF THE SYSTEM

The United Nations Compensation Commission (UNCC) is a subsidiary organ of the United Nations Security Council. It was established by the Council in 1991 to process claims and pay compensation for losses resulting from Iraq's invasion and occupation of Kuwait. Compensation is payable to successful claimants from a special fund that receives a percentage of the proceeds from sales of Iraqi oil.[1] The Security Council established Iraq's legal responsibility for such losses in its resolution 687 of 3 April 1991:

“Iraq...is liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign Governments, nationals and corporations, as a result of Iraq's unlawful invasion and occupation of Kuwait.”[2]

In its framework, the Security Council, as the creator, supervises the UNCC of which the main organ is its Governing Council. The Governing Council is headed by the Secretariat and composed of the representatives of member states of Security Council and has overall responsibility in deciding policy matters and making final and binding decisions on the amounts of compensation. Appointed by the Governing Council, the Commissioners work in panels to make recommendation on the amounts of compensation. To service the Commission there is also a Secretariat headed by an Executive Secretary which consists not only of lawyers but also of computer experts, statisticians, and accountants.

Although claims commissions are not new to international law,[3] scholars heralded the establishment of the Commission by the United Nations as “unique” and “unprecedented.”[4] Indeed, the UNCC is the first claims commission of its kind established by the Security Council. Nevertheless, actually since the birth of the Commission, its nature has been under severe controversy. Namely, it is supposed to be a political organ but by looking into the general procedures it has been following and the substantive rules applied in the process, it is virtually to some extent working as a quasi-judicial body. Just as Carlos Alzamora, the Executive Secretary of the UNCC established in 1991, ever addressed in an international forum,

“…the Commission is fundamentally political and administrative in nature, but that it does not entirely dispense with elements of judicial settlement, …”.[5]

Personally I am a supporter of such a point of view: From an institutional viewpoint, the UNCC is curious creation assuming the form of a hybrid between an administrative claims procedure and an international tribunal. It incorporates a system of independent commissioners, with a task reminiscent of that of arbitrators or judges, with a political superstructure, the Governing Council. This body will make the final decisions based on recommendations. But the political composition of the Governing Council can impede the work of the Panels, in that the Governing Council may easily become an arena for the political ambitions of individual Governing Council member states. In extreme, the awards of the UNCC would be more based on the interests and policies of the state members of the Council, and not on principles of international law. This, to my mind, leaves the door open for serious criticism of the procedure.

But things might be much worse than you imagined when we pierce its veil and look into what is really going on under this hybrid system. This article is just standing on this side to highlight some of the defects and difficulties with the institutional model chosen and focus on a discussion on the procedural justice in the UNCC, whereby particular attention is devoted to those practical and serious problems which the UNCC procedure gives rise to and which Iraq faces in the preparation of its legal defense.

II.  IRAQ’S STANDING AS DEFENDANT VS. THE REQUIREMENT OF DUE PROCESS

Let’s first take a look at Iraq’s position in the claims procedure before the UNCC. There is no doubt that Iraq is the proper respondent in all the cases submitted to the UNCC; but, surprisingly, Iraq is not a party to the proceedings. Iraq has been granted a ‘right to a fair hearing’ neither in the Security Council Resolutions establishing the UNCC, nor in the UNCC Procedural Rules.[6] Nonetheless, the Secretary General ‘s Report preceding the establishment of the Commission points out that:

“Given the nature of the Commission, it is all the more important that some element of due process be built into the procedure. It will be the function of the commissioners to provide this element.”[7]

As was already established, the panels comprising independent commissioners perform the core judicial tasks by reviewing the claims, but the panels cannot render binding judgments. Apparently, the Commission was not even intended to be fully disconnected from political considerations. Precisely this political control over the adjudicative process waters down the contribution of the Commissioners and makes such due process undertakings hollow.

It is true that Iraq has been allowed to present its views at the beginning of each Governing Council Session and submit written comments under Article 16 of the Procedural Rules. However, this does not amount to “due process” with the requirement of audi alteram partem (the right of each party to be heard), since in the context of Article 16 Iraq will not be given the identity of the claimants, nor any other particular forms, such as legal beliefs submitted by the claimants. All this makes it difficult for Iraq to prepare its defense. And it also makes us to estimate what impact these “comments” might have and what issues they address, since these comments are kept confidential under the Procedural Rules. Thus, such limited opportunities which are afforded to Iraq to make comments are not considered as application of the rights that any defendant in any civilized country has, but, cynically speaking, they are conceived as some kind of acts of grace granted by the Holy Office of a modern Inquisition to the sinner before he is sent to the stake.

In reality, the situation in the UNCC proceedings in even worse. Iraq’s right to be heard is not just violated, it has simply not been foreseen. The basic concept on which this system is built assumes that there is no need for Iraq to be heard. And some people commenting on the system even dared to say: “Iraq has no discernible legal interest to defend”. In other words, when Iraq’s counsels complain there is no due process in the UNCC, those who have devised this system would reply: there is no need for due process.

You may think this an exaggeration; but by looking into some eye-catching flaws of the procedure before the UNCC, and the liberties that it takes with the rights normally granted to a defendant, you will easily come to a conclusion that: Iraq has no standing as defendant before the UNCC.

A. Deprivation of Iraq’s Right to Be Informed of and Have Access to the Claims Raised against It

The abuses started with the violations of the right to be informed of the charges and claims brought against the defendant. One of the issues with which the Commission is confronted is the question: should Iraq get the claims files? You may be shocked such a question should even be asked. The answer seems obvious: of course, in any court or arbitration proceedings, the defendant should get the files. But in the UNCC system, the answer is far from apparent; indeed Iraq’s access to the claims is seriously restricted and in many claims altogether denied.

First of all, Iraq is not informed of the claims when they are made. Many claims have been awarded without Iraq ever having seen them. The only information to Iraq that the Rules foresee are the Article 16 Reports as mentioned above. But these reports are far from sufficient for a serious investigation of the claim; they certainly do not allow a considered defense against them.

Even worse, Article 36 of the Rules provides that, in these “unusually large or complex cases”, a Panel may “request further written submissions and invite individuals, corporations or other entities, Government or international organizations to present their views in oral proceedings”. But confusingly, the UNCC Governing Council, when making these rules, has sought the views of everybody in the world but just has not wasted any though on Iraq as the State most concerned with these proceedings. If Panels should invite the views of Iraq under this provision, the Rules grant to it no standing other than that of any outsider who might be called to add his grain of wisdom to that of that of the Panel. Compared to such rules, the Holy Inquisition is a model of due process.

B. Infringement of Iraq’s Right to Comment and Present Defense

The second fundamental procedural right which is seriously violated, after the right to be informed, is the right of defendant to comment on the opponent’s case and to argue its own case. It is inherent in the adversarial procedure dear to the Common law; it is also inherent in the “principe du contradictoir” which rules the French family of laws on civil procedure both before State courts and in arbitration. It would thus appear to be a principle of general application in any procedure which meets a minimum standard of law. Some people would characterize the procedure before the UNCC as “administrative, but this does not change anything in this respect. Due process and also, to variable degrees, the right to be heard are fundamental principles recognized not only in judicial or arbitral proceedings but, as far as the writer knows, also in administrative proceedings in all civilized countries.

The denial to the defendant of any real right to present its case is obvious in proceedings where the Rules provide for merely one opportunity of “commenting”, not on the claims themselves but only explanations which the Secretariat (and not even the Panels concerned) has extracted from them and made available in its “Reports and Views on Claims” under Article 16. Here, too, some timid alleviation of the fundamental injustice in the Rules has been provided by the Panels in “unusually large or complex cases”. But these exceptions apply only in these cases and not in other cases for which hundreds of millions of dollars have been awarded for claims which Iraq never saw and on which it had no proper opportunity to comment.

C. A third Category of Procedural Violations: The Use of Evidence Undisclosed to Iraq

Apart from the shocking violations of the due process, there are also others: as a third category of procedural violations, there are the rules relating to evidence, in particular the right to produce evidence, the right to inspect evidence and the right to comment on it. In all these areas there are violations of due process of law. The WBC claim[8] is a particularly striking example.

In this case, accounting evidence was not brought before the Panel but remained in Kuwait. It was a claim by the Kuwait Oil Company (KOC) and the accounting records were kept in Kuwait. The Panel did not have any access to them directly, not did Iraq. In order to provide at least a semblance of scrutiny, the Panel organised an inspection. But the Panel did not require the production of the records nor did it go to Kuwait to inspect them there, instead, it delegated its task to a so-called “Verification Team” which included only one member of the Panel and two members of the Secretariat and an outside consultant. The Team did its job obviously in the presence of the claimant, that is to say the KOC. However, the inspection was conducted in the absence of any representative of the Defendant, a fact not really surprising, after all that it known about the UNCC procedure. More surprisingly, the report[9] of the Verification Team had not been given to Iraq. Therefore, Iraq did not have a possibility even of commenting on this indirect and secondary evidence on which the Panel relied when finding that the claims were substantiated.

This shows the extent to which normal and indeed elementary rules of evidence, and the processing of evidence, are deliberately ignored or violated in this strange procedure. Just for this reason, we can’t help suspecting that, whatever, such a panel “recommendation” and the decision of the Governing Council based on it would be considered null and void as an award or a judgement under any system of law recognising the concept of due process. Enforcement would be indisputably denied, for instance, under the New York Convention of 1958 on the Recognition and Enforcement of Arbitral Awards.[10]

D. Obscurity of Decision-making Process

In addition, let’s take a look at the decision making in the UNCC, a diffused and obscure process. As mentioned in preceding context, the findings of Panels of Commissioners are not awards or decisions but “recommendations” which are neither final nor binding in respect of the parties. The final and binding decisions are made by the Governing Council. According to Article 40 of the Provisional Rules, the Governing Council “may review the amounts recommended, increase or reduce them”. There is no indication as to basis on which such a review will be made, nor who will be heard in the review procedure. No right for comment, either on the recommendation of the panels or on a proposal for modifying it, is afforded to Iraq.

Actually this is not the end of the list at all. There are quite a few other procedural defects within the UNCC system such as the financial imbalance: Iraq is prevented from using its own funds for its defence against richly-endowed claimants and the UNCC; the lack of consent and acquiescence by Iraq[11]; the lack of transparency and objectivity in the procedure[12]; violation of the right to present counterclaims and to make set-offs[13]; etc.