The jurisdiction is thus confined to questions of "the interpretation or
the application" of the FCN Treaty and Protocols and of the Agreement
Supplementing the Treaty between the United States of America and the
Italian Republic, of 26 September 1951 (which Agreement is hereinafter called "the Supplementary Agreement"), Article IX of which provides that it is to "constitute an integral part" of the FCN Treaty. This
same jurisdiction may accordingly be exercised by this Chamber, created
by the Court to deal with this case by virtue of Article 26, paragraph 2,
of its Statute, and Articles 17 and 18 of its Rules, at the request of and
after consultation with the Parties.
49. While the jurisdiction of the Chamber is not in doubt, an objection
to the admissibility of the present case was entered by Italy in its CounterMemorial, on the ground of an alleged failure of the two United States
corporations, Raytheon and Machlett, on whose behalf the United States
claim is brought, to exhaust the local remedies available to them in Italy.
This objection, which the Parties agreed should be heard and determined
in the framework of the merits, must, therefore, be considered at the
outset.
50. The United States questioned whether the rule of the exhaustion of
local remedies could apply at al1 to a case brought under Article XXVI of
the FCN Treaty. That Article, it was pointed out, is categorical in its terms,
and unqualified by any reference to the local remedies rule; and it seemed
right, therefore, to conclude that the parties to the FCN Treaty, had they
intended the jurisdiction conferred upon the Court to be qualified by the
local remedies rule in cases of diplomatic protection, would have used
express words to that effect; as was done in an Economic Co-operation
Agreement between Italy and the United States of America also concluded in 1948. The Chamber has no doubt that the parties to a treaty can
therein either agree that the local remedies rule shall not apply to claims
based on alleged breaches of that treaty ;or confirm that it shall apply. Yet
the Chamber finds itself unable to accept that an important principle of
customary international law should be held to have been tacitly dispensed
with, in the absence of any words making clear an intention to do so. This
part of the United States response to the Italian objection must therefore
be rejected.
5 1. The United States further argued that the local remedies rule would
not apply in any event to the part of the United States claim which
requested a declaratory judgment finding that the FCN Treaty had been
violated. The argument of the United States is that such a judgment would
declare that the United States own rights under the FCN Treaty had been
infringed; and that to such a direct injury the local remedies rule, which
is a rule of customary international law developed in the context of the
espousal by a State of the claim of one of its nationals, would not apply.
The Chamber, however, has not found it possible in the present case to