Imposing Liability for Losses from Aggressive War: An Economic Analysis of the UN Compensation Commission

M. B. Fox
2002 European journal of international law  
Through an economic analysis of the work of the United Nations Compensation Commission (UNCC), this Comment seeks to understand better the process by which liability is imposed for losses caused by aggressive war. It concludes that a loss is appropriately compensable by an aggressor state if the war is a "but for" cause of the loss and ex ante the war increased the likelihood that the loss would occur. The loss need not be as foreseeable as in the law of negligence. The total amount of losses
more » ... propriately compensable under this standard may, however, exceed the maximum that is desirable or even practical to collect. Iraq involves such a shortfall. Collecting more would hinder its reintegration into the world community. Moreover, any increase in the UNCC tax rate on Iraq's oil revenues is likely to reduce, not enhance, total revenues because of the added disincentives to export. Because of this shortfall, the practice of denying Iraq formal access to UNCC proceedings involves no procedural unfairness. The UNCC is effectively only deciding who, among all claimants against Iraq, should receive money from a fixed, maximally extractable sum. UNCC decisions also violate no norm of substantive fairness. The money extracted by the UNCC and the economic effect of the more formal sanctions imposed on Iraq, while both burdens on the Iraqi people, do not raise comparable fairness issues. As a general matter, imposing the losses on the people of the aggressor state, even if onerous, is not more unfair than leaving them to be borne by the victims of the aggressive war. Moreover, payments to the UNCC are in essence a tax on Iraq's oil wealth, not on the fruits of the labour, skills and non-oil resources of the Iraqi people. Unlike the more formal sanctions, the UNCC payments simply deprive the Iraqi people of a portion of the good luck they had to have oil resources in the first place.
doi:10.1093/ejil/13.1.201 fatcat:5owfgvs47zg6poqqvccw77pdxi