Case Analysis: Pulp Mills on the River Uruguay (Argentina v. Uruguay)

Author: Abhishek Gitte.

CITATION

(2006) 45 ILM 1025

NAMES OF PARTIES

Plaintiff: Argentina

Defendant: Uruguay

JUDGES

Vice-President: TOMKA,

Acting President: Judges KOROMA, AL-KHASAWNEH, SIMMA, ABRAHAM, KEITH, SEPÚLVEDA-AMOR, BENNOUNA, SKOTNIKOV, CANÇADO TRINDADE, YUSUF, GREENWOOD;

Judges ad hoc: TORRES BERNÁRDEZ, VINUESA;

Registrar: COUVREUR.

INTRODUCTION

“The pulp mill dispute” was a very famous dispute between the two countries Argentina and the Uruguay which was related to the construction and building of pulp mills on the river of Uruguay. This dispute not only affected a diplomatic relations, economic relations, and public relations between these two countries but this dispute between both parties also affected tourism and transportation as well as the other friendly relations between these two countries. The dispute between these two countries has a historical importance as well as cultural.

The International Court of Justice (ICJ) which is important judicial institution of the United Nations has given an important and landmark judgment by which it clarifies the standards in International Law for any kind of breach of the environmental obligations undertaken by the parties. This judgment is very important for all the countries and corporate organizations regarding the fulfillment of the compliances.

In this case analysis author will analyze the case of “Pulp Mills on the River Uruguay (Argentina v. Uruguay)”¹. This case is related to the environmental obligations. The author has reviewed the background of the case, facts and issues involved in the case, and decision given in this case. The author has also critically analyzed this case in this case analysis.

FACTS

In the year 2003, the Government of Uruguay gave permission to the Spain based Corporation, “Empresa Nacional de Celulosas de España (ENCE)”, for the construction of a pulp mill in the Fray Bentos, on the River Uruguay. In 2005, another Finland based company Botnia also received environmental permission to construct a mill. The River Uruguay acts as a line of border between these two countries Argentina and Uruguay. The issues related to this river are regulated by a bilateral treaty between these two countries known as “Statute of the Uruguay River” which was signed by both the parties in 1975.

Republic of Argentina filed a suit in the International Court of Justice on 4 May 2006, mainly alleging that the Government of Uruguay has violated the environmental obligations given in the Statute. Argentina requested the Court to pass an order for suspension of the ongoing construction of the pulp mills, but Court dismissed this request. Argentina’s main claims were that Uruguay has not complied with the procedure of notification and consultation given in the Statute by giving permissions to the construction work of two pulp mills without asking for the consent of Argentina; and these mills will create an environmental impact on the river and surrounding areas, this is clearly breach of obligation under the Statute to preserve and maintain the environment of the river and failure in the protection of biodiversity.

Consequently Argentina asked for the compensation, termination of the construction, and a promise that the Uruguay Government will follow compliance given in the Statute in the future. Uruguay refused these claims and argued that its mere obligations to inform Argentina which it had completed even though after its decision. Also it argued that the technology used in these mills will avoid polluting the river, these mills have high end waste cleansing equipment, which are also adopted by the United States and the European Union as the best available technology. These arguments were supported by an independent study conducted by World Bank.

ISSUES

1. Whether there is link between the procedural obligations and the substantive obligations given in the 1975 Statute?
2. What is interrelation between the procedural obligations?
3. Whether the Parties agreed to derogate from the procedural obligations set out in the 1975 Statute?
4. Whether the Uruguay has violated the obligations?

JUDGMENT

Arguments, Reasoning, and Observations 

The main allegation made by Argentina was breach procedural and substantive obligations given in the 1975 Statute. Therefore the Court first considered the issue of alleged breach of procedural obligations given in the Articles 7 to 12 of the 1975 Statute² in relation to the “Celulosas de M’Bopicuá S.A. (CMB)” and “Orion (Botnia)” mill projects. The issue here was whether there is link between the procedural obligations and the substantive obligations given in the 1975 Statute? Argentina argued that the breach of procedural obligations directly leads to the breach of substantive obligation because these two types of obligations are indivisible from each other. Uruguay contented this and argued that the procedural obligations are given in the statute to facilitate the performance of the substantive obligations and it is up to Court to decide about breach of substantive obligations.

Court observed that Article 1 of 1975 Statute³ deals with the main purpose and the objectives between the parties which is to successfully reach “the optimum and rational utilization of the River Uruguay” by means of the “joint machinery” which forms the procedural and substantive obligations under the 1975 Statute. The Court observed that there is a functional link for the prevention between the two types of obligations given in the 1975 Statute. At the same time that link does not prevent the any party in this matter to answer for those obligations individually.

While deciding whether Uruguay has fulfilled its obligation to inform “Comisión Administradora Del Río Uruguay (CARU)” and to inform its plans to the Argentina Court analysed the nature and role of CARU. Uruguay argued that the CARU is just a commission and it is not given any autonomous powers. Its role is to work as a mechanism to facilitate co-operation between the Parties. Argentina argued that the CARU is established for special roles and not compiling with its obligation is not in accordance with the 1975 Statute. Court concluded that CARU is a key organisation in this matter and it can be concluded from the roles that are assigned to the CARU.

The Court remarked that, the obligations to inform “Comisión Administradora del Río Uruguay (CARU)” of any plan which comes under its purview is an essential to comply for both the parties as it is mentioned in the Article 1 of Statute of 1975 the objectives accepted by the parties themselves. The Court decided from Uruguay has failed to comply with the obligation given under Article 7 of the Statute of 1975 by not informing CARU the plan of mills works before the giving of the environmental permissions for the mills and for the port terminal which is adjacent with the Orion (Botnia) mill. Also Court concluded that it was obligation of the Uruguay to notify and give information about the work to the Argentina under Article 7 of the Statute of 1975. By not informing to Argentina, Uruguay has breached this obligation.

Next issue was whether the Parties agreed to derogate from the procedural obligations set out in the 1975 Statute? Uruguay argued that the permissions given are not within the scope of CARU. It submitted that “understanding” of 2 March 2004 includes the extensions of both plant. On the other side Argentina argued that the “understanding” of 2 March 2004 was inserted to ensure comply of obligations therefore these projects comes under the scope of CARU. Court concluded that the Uruguay has not complied with the terms of “understanding” of 2 March 2004 and therefore it is not entitled to get any exemptions from the obligations. Also court concluded that the agreement to establish the GTAN which is High-Level Technical Group didn’t gave permit to Uruguay to exempt from its obligations of “information and notification” as per Article 7 of the 1975 Statute⁴.

Lastly Court examined the whether Uruguay has violated any substantive violation or not? Article 1 of the Statute deals with “The obligation to contribute to the optimum and rational utilization of the river”, Argentina argued that the Uruguay has failed to comply with this obligation by not taking steps for prevention of pollution in the river and permissions given for work are against the principle of equitable and reasonable use. Uruguay argued that it has not breached this obligation and this principle does not provide basis for the new uses. Article 35 of the Statute⁵ deals with “The obligation to ensure that the management of the soil and woodland does not impair the regime of the river or the quality of its waters”, Argentina argued that the planting of eucalyptus and supply of raw materials by Uruguay has impacted the soil and quality of water. Uruguay argued that Argentina has not argued on the basis of management of soil by Uruguay.

The Court observed that the Argentina has failed to support its contentions. Article 36⁶ deals with “The obligation to co-ordinate measures to avoid changes in the ecological balance”, Argentina argued that the Uruguay has violated obligation to comply with the CARU to avoid any changes by not following the procedure and not coordinating with CARU. Uruguay contended that in regard with the obligation given in the Article 36 conduct of the parties should be taken into consideration and according to this the mills meets the requirements. Court concluded that the Argentina has not able to prove that the Uruguay was not wanting to co-ordinate as per Article 36 of the Statute.  

Article 41 of the Statute 1975 covers “The obligation to prevent pollution and preserve the aquatic environment”, Argentina argued that Uruguay has breached the obligation given in the Article 41⁷ by allowing discharge of additional nutrients in the water which affected the water and created stagnation. Further it argued that Uruguay has breached this obligation by not taking proper measures to prevent pollution which has also affected the other uses. Uruguay contended and argued that the prevention of pollution does not include restriction on every discharge but it means the parties should meet with standards. It argued they have used best technology to prevent the pollution and has not breached any obligation. Court decided to apply “Environmental Impact Assessment” other than the rules given in the Statute to decide whether parties have breached obligation related to prevention of pollution and also to decide impact of those discharges on the quality of the waters of the river, on its ecological balance and on its biodiversity.

Both the parties were agreed for the “Environmental Impact Assessment”. Argentina argued that Uruguay must have conducted “Environmental Impact Assessment” in accordance with the International Law before giving permissions for the work. Uruguay contended that there should assessment to check prevention of transboundary Harm and not for speculative risks. Court observed that there is International Law which makes it obligatory for the parties to conduct such assessment. UNEP Goals and Principles are not necessarily binding on these states. The Court also concluded that an environmental impact assessment must be conducted before the establishment of a project.

In the assessment Court analysed the place chosen for Orion (Botnia) mill at Fray Bentos, technology used, and impact of the discharges on the quality of the waters of the river. Regarding place chosen for the construction of mill, Argentina argued that Uruguay has not tried to find alternative place for the construction which affected the water and soil. Uruguay argued the assessment was completed and the place was chosen because comfort to provide raw material and worker on the site. Court concluded that this should be done in accordance with the guidelines of CARU.

Also Court concluded that the Uruguay has used high quality technology in the mills for the prevention of pollution. While analysing the impact of discharges on quality of water, Court checked the reports regarding oxygen, phosphorous, phenolic substances, etc. in most of them Court observed that Uruguay has not crossed the given limits. Also Court checked the reports of air pollution and effect on biodiversity but did not found any proof supporting allegation by Argentina regarding breach by Uruguay. Court concluded that Uruguay has not breached its obligations under Article 41 of the 1975 Statute.

Ratio Decidendi

The Court by majority decided Uruguay has breached the procedural obligations given under Articles 7 to 12 of the 1975 Statute of the River Uruguay. By majority Court decided that the Uruguay has not breached its substantive obligations under Articles 35, 36 and 41 of the 1975 Statute of the River Uruguay. The Court rejected all the claims made by Argentina.

ANALYSIS

The case of Pulp Mills on the River Uruguay (Argentina v. Uruguay) is important for three major aspects, for environmental obligation of the parties, environment impact assessment, and prevention of transboundary harm. In this section author will critically analyze these aspects of the case.

Environmental obligations are the obligations which parties accept for them to protect the environment. Such obligations are necessary to protect the environment from harm and disturbance. There is no International Law which imposes compulsory environmental obligations. In this case the parties had accepted and signed Statute of the River Uruguay 1975 under which obligation of the parties were given. In this case the main issue and allegation was about breach of obligations. As we have discussed earlier in this case comment that there were procedural obligations and substantive obligations.

The Court found that Uruguay has breached procedural obligations but it has not violated substantive obligations. Also it was concluded that breach of procedural obligations does not amounts to breach of other obligations. In my opinion the conclusion made by the court is correct but sometimes breach of procedural obligation may lead to termination of co-operation for environmental obligation by the parties, which will ultimately defeat the purpose of such obligations.

Another important aspect of this case is Environmental Impact Assessment. In this case the Court relied on Environmental Impact Assessment to decide whether Uruguay has breached substantive obligations given under the 1975 Statute. In this assessment the Court relied on the reports of impact caused by discharge in the water and concluded that Uruguay has not breached any substantive obligations. In my opinion there was lack of proof from the side Argentina to establish its allegations of breach same was observed by the Court, but court could have established example for the world regarding Environmental Impact Assessment by conducting it in strict manner. Also the aspect of prevention of transboundary harm was important in this case.

The Court analyzed all the issues related to transboundary harm and concluded that there is no such harm caused by the Uruguay by its actions. In my opinion the conclusion of the Court is absolutely right because Uruguay has provided proper evidences related to this which clears this issue.   

CONCLUSION

In this case analysis of the case of Pulp Mills on the River Uruguay (Argentina v. Uruguay) author has analyzed and discussed facts, issues, claims and arguments by parties, and observation and decision of the Court. This case is mainly important for the legal aspect of environmental obligation in International Law. The researcher has also critically analyzed major aspects of this case in this case comment.

The findings after the critical analysis of this case is that the decision given by the Court has gained importance in law in disputes related to environmental obligations and transboundary harm but Court could have establish proper standards for environmental obligations in this case.

1. Pulp Mills on the River Uruguay (Argentina v. Uruguay), Judgment, I.C.J. Reports 2010, p. 14.[↩]
2. Article 7 to 12 Statute of the River Uruguay 1975.[↩]
3. Article 1 Statute of the River Uruguay 1975.[↩]
4. Article 7 Statute of the River Uruguay 1975.[↩]
5. Article 35 Statute of the River Uruguay 1975.[↩]
6. Article 36 Statute of the River Uruguay 1975.[↩]
7. Article 41 Statute of the River Uruguay 1975.[↩]