ELSI had no direct action against the Italian Government under Italian
law, it was argued by the Applicant that Italy, if it was indeed at that time
of the opinion that the local remedies had not been exhausted, should
have apprised the United States of its opinion. According to the
United States, however, at no time until the filing of the Respondent's
Counter-Memorial in the present proceedings did Italy suggest that
Raytheon and Machlett should sue in the Italian courts on the basis of
the Treaty. The written aide-mémoire of 13 June 1978, by which Italy
rejected the 1974 claim, had contained no suggestion that the local
remedies had not been exhausted, nor indeed any mention of the matter.
54. It was argued by the Applicant that this absence of riposte from
Italy amounts to an estoppel. There are however difficulties about drawing any such conclusion from the exchanges of correspondence when the
matter was still being pursued on the diplomatic level. In the Interhandel
case, when Switzerland argued that the United States had atone time actually "admitted that Interhandel had exhausted the remedies available in
the United States courts", the Court, far from seeing in this admission an
estoppel, dismissed the argument by merely observing that "This opinion
was based upon a view which has proved unfounded" (Interhandel, Judgment, I.C.J. Reports 1959, p. 27). Furthermore, although it cannot be excluded that an estoppel could in certain circumstances arise from a silence
when something ought to have been said, there are obvious difficulties
in constructing an estoppel from a mere failure to mention a matter at a
particular point in somewhat desultory diplomatic exchanges.
55. On the basis that the local remedies rule does apply in this case, this
Judgment may now turn to the question whether local remedies were, or
were not, exhausted by Raytheon and Machlett.
56. The damage claimed in this case to have been caused to Raytheon
and Machlett is said to have resulted from the "losses incurred by ELSI's
owners as a result of the involuntary change in the manner of disposing of
ELSI's assets" : and it is the requisition order that is said to have caused
this change, and which is therefore at the core of the United States complaint. It was, therefore, right that any local remedy against the Italian
authorities, calling in question the validity of the requisition of ELSI's
plant and related assets, and raising the matter of the losses said to result
from it, should be pursued by ELSI itself. In any event, both in order to
attempt to recover control of ELSI's plant and assets, and to mitigate
any damage flowing from the alleged frustration of the liquidation plan,
the first step was for ELSI - and only ELSI could do this - to appeal to