The Hague, 1 June 2001

Ladies and gentlemen,

As Dr. Walch has pointed out to you, I have now represented Liechtensteinian interests in connection with the still unresolved issue of the treatment of Liechtensteinian assets within the territory of former Czechoslovakia for a number of years. Indeed, some of you here today have been close observers of this problem-complex for several years.

The background to the case is this: Not only the family of the present head of state Prince Hans-Adam II., but also numerous other Liechtenstein citizens owned substantial assets within the territory of what is now the Czech Republic, and partly also the present-day Slovak Republic. After World War II, these assets were expropriated without compensation by the Czechoslovak rulers of the day under the "Beneš Decrees" - the grounds given were that Liechtenstein subjects were to be treated as ethnic Germans. This meant - according to those in power at the time, that the Principality of Liechtenstein and its citizens were covered by the expropriation decrees aimed at German and Hungarian nationals in Czechoslovakia. This happened even though Liechtenstein was one of the few countries that never recognized the 1938 Munich Agreement between Germany, Italy, France and Britain which allowed Hitler's Germany to annex portions of Czechoslovak territory.

A political assessment of what happened then, also in the light of international law, is undoubtedly a complex set of issues in its own right.

But what is the Principality of Liechtenstein's action against the Federal Republic of Germany before the International Court of Justice actually about? And what does Germany have to do with the expropriations imposed by the Czechoslovakian government of the time?

The answer is this: Since 1998 Germany has accepted - and indeed defended the position - that Czechoslovakia had acted within its rights when it confiscated Liechtensteinian assets within its territory as if they had been German-owned assets abroad, the purpose being to meet Germany's war-reparation debts. In other words, Germany has adopted the stance since 1998 that Germany war-reparation debts to Czechoslovakia, or to the present-day Czech Republic, were rightfully settled using the assets of Liechtenstein's citizens. Yet at the same time, Germany refuses to provide Liechtenstein with compensation as the rules of international law require.

In the opinion of the Principality of Liechtenstein, this is in breach of international law. By adopting its present attitude, Germany is violating the sovereignty and neutrality of the Principality of Liechtenstein, and is obliged to provide adequate compensation for the reparation damages suffered by Liechtenstein citizens. As a result of Liechtenstein's application, the International Court of Justice is now called upon to establish that all of this is so.

How, then, did the Federal Republic of Germany - particularly its courts of law - come to take up this position which renders it liable under international law? If I may, I would like to put you some facts that bear significantly on a judgement of this case, and form part of the post-war history of Germany and its neighbours that has not yet been properly dealt with:

- To this day, the victorious powers in World War II have never concluded a for-mal peace treaty with Germany. After 1945, they took what they wanted, partly by confiscating German-owned assets outside Germany.

- The Federal Republic of Germany signed the "Transition Agreement" (Überleitungsvertrag) with the three Western Allied Powers (France, Britain and the United States) in 1955. Among the terms of this agreement was that Germany respected the unilateral reparation measures taken by the victorious powers in respect of its citizens' assets outside Germany on the one hand, while undertaking on the other to provide compensation to the victims of the expropriations made for reparation purposes.

- Until 1998, the Federal Republic of Germany and the Principality of Liechtenstein were in agreement that Liechtensteinian assets were not covered by the reparation clauses of the "Transition Agreement". Liechtenstein is not Germany, and indeed it was a neutral state during World War II. That meant that is was not - at least this was the understanding at the time - subject to what we know as the "international law of war", and hence did not fall under the terms of the "Transition Agreement".

- Germany then changed its position in 1998. The problems began with the disputed painting: The property of the Liechtenstein royal family in what is today the Czech Republic includes an extensive art collection. An oil painting from this collection by Pieter van Laer, which had been thought lost since World War II, turned up again 45 years later in a Cologne exhibition, on loan from the Czech state. The Prince ordered the seizure of the painting as his property and sued for its return to its possession. German courts denied legal redress, basing their rulings on the relevant passages of the "Transition Agreement" applying to German-owned assets outside the country, which were permitted to be appropriated for reparation purposes. In its decision of January 1998, the Federal Constitution Court ultimately sanctioned this legal standpoint which, contrary to the German position prior to 1998, treats Liechtensteinian assets as German-owned assets outside Germany for the purposes of the reparation clauses in the "Transition Agreement".

In response the Prince, in his capacity as a private individual, filed a human rights suit against the Federal Republic of Germany at the European Court of Human Rights in Strasbourg, which has been declared admissible on all counts and, owing to its fundamental significance, has been entrusted to the Grand Chamber. The case is still pending.

- The Federal Republic of Germany took the decision by its Federal Constitutional Court in Karlsruhe as an opportunity to make a fundamental shift from its earlier position. Despite the protest made, Germany today takes the stance that is in order for Liechtensteinian assets to be used as a purpose of settling German reparation debts. It has been established that Liechtenstein and Germany are "in dispute" on this issue. In cases such as this, when all diplomatic efforts came to nothing, a state has the opportunity to take the matter before the Inter-national Court of Justice in The Hague.

Ladies and gentlemen, I think this will clarify the legal context, particularly with re-gard to the international law, in which the application to the International Court of Justice in The Hague has been made:

1. The application submitted today constitutes legal action by a state, the Principality of Liechtenstein; it is not, as in the other contentious cases that have already been made public, a private matter of the Prince of Liechtenstein or of any other individual. The parties affected are the state of Liechtenstein and its citizens. Those who have suffered direct damage are some 60 Liechtenstein families.

2. This is solely and entirely a matter of resolving a dispute between the Principality of Liechtenstein and the Federal Republic of Germany. Germany has held Liechtenstein's rights of sovereignty in disregard since 1998, on the basis of a decision taken by its Federal Constitutional Court. It views Liechtenstein and its citizens as part of the German nation. Moreover, it is an established fact that Germany has used the assets of Liechtenstein citizens in former Czechoslovakia to settle its own war-reparation debts. By refusing to pay compensation for this, Germany renders itself liable under international law. Relations between the Principality of Liechtenstein and the Czech Republic are not an object of these proceedings, however.

The International Court of Justice has jurisdiction on this matter, on the basis of the European Convention for the Peaceful Settlement of Disputes of 1957. Both Ger-many and Liechtenstein are party to the Convention without reservation, and its terms came into force between the two countries on 18 February 1980.

In conclusion, I would like to say a few words about what happens next. The application which the Principality of Liechtenstein has submitted will now be officially communicated to the Federal Republic of Germany. The German government will then also appoint its Agent for the case. The President for the International Court of Justice will subsequently call both agents to the Court, to discuss the timetable and procedure with them. We expect the proceedings to last several years, as a number of complex issues of public international law need to be discussed. As far as the Principality of Liechtenstein is concerned, the prime issue is that of the state's sovereignty and neutrality. However, as the case proceeds the extent to which Germany is obliged to render appropriate compensation to Liechtenstein for the reparation damages suffered will arise as a further issue.