## Facts

- Costa Rica sued Nicaragua over Nicaraguan military incursions and works in a protected wetland area in northern Isla Portillos.
- In 2010 and 2013, Nicaragua excavated three channels (caños) from the San Juan River into Costa Rican territory, removed vegetation and trees, and altered local hydrology.
- In a 2015 merits judgment, the Court found Costa Rica held sovereignty over the affected wetland area and that Nicaragua violated that sovereignty, triggering an obligation of reparation including compensation.
- The 2015 judgment directed the parties to negotiate compensation; negotiations failed.
- Costa Rica asked the Court to determine compensation in 2017.
- Costa Rica sought compensation for (1) quantifiable environmental damage (including loss of ecosystem services) and (2) response costs and expenses (including monitoring, compliance with provisional measures, and construction of a dyke to prevent further harm).

## Issues

1. What rules govern compensation as a form of reparation for internationally wrongful acts, including environmental injury?
2. Which asserted environmental harms are compensable, and what valuation method should be used?
3. Which claimed costs and expenses are sufficiently caused by, necessary for, and reasonably related to Nicaragua’s wrongful acts?
4. Whether pre-judgment and post-judgment interest are available as part of full reparation, and on what terms.

## Decision

- The Court held Nicaragua must compensate Costa Rica for material damage caused by Nicaragua’s unlawful activities on Costa Rican territory, including proven environmental damage and certain recoverable costs and expenses.
- The Court held environmental damage is compensable, including impairment or loss of the environment’s capacity to provide goods and services.
- The Court declined to adopt either party’s valuation model as presented (ecosystem-services valuation versus replacement cost) and instead assessed compensation head by head using reasonable and objective criteria.
- The Court awarded a single lump sum incorporating compensation for environmental damage, allowed costs and expenses, and pre-judgment interest, and ordered post-judgment interest until payment.
- The total award was materially lower than Costa Rica’s request and higher than Nicaragua’s proposed amount.

## Legal Principles

- A state responsible for an internationally wrongful act must make full reparation for injury caused; compensation is appropriate where restitution is materially impossible or unduly burdensome.
- Environmental harm is compensable injury, including diminished ecosystem functions and the loss or impairment of the environment’s ability to provide goods and services.
- Uncertainty in the precise extent of damage does not bar compensation if damage is shown with sufficient probability and valuation is reasonable.
- Environmental valuation must rest on reasonable and objective criteria grounded in the evidence; the Court may use an itemized, claim-by-claim approach rather than a single formula.
- Recoverable costs and expenses must be a direct and foreseeable consequence of the wrongful act and necessary and reasonable to prevent or limit harm; claims may be reduced or denied for weak causation, disproportionality, overlap, or insufficient proof.
- Interest may be awarded as part of full reparation to address the time value of money, with rate and accrual tied to when losses were incurred and when payment became due.

## Conclusion

The Court quantified Nicaragua’s reparation obligation through a lump-sum monetary award, confirming that proven environmental degradation—including loss of ecosystem services—can constitute compensable material injury and that related response expenditures and interest may be included when causally linked, necessary, and reasonable.


Certain Activities Carried Out by Nicaragua in the Border Area (Costa Rica v. Nicaragua), 2018 I.C.J. 15 (Feb. 2)