The Court found that Poland’s counter-claim regarding the titles did not possess the necessary direct link to the question of indemnity for the illegal expropriation. The expropriation was deemed illegal regardless of the validity of the titles; therefore, the issue of titles was a separate legal matter. Consequently, the Court upheld Germany’s objection and struck the counter-claim.
This ruling established the principle that a defendant state cannot use a counter-claim as a tactical weapon to broaden the scope of a dispute beyond what the claimant state agreed to submit to the tribunal. Beyond procedural law, the documents associated with Compromis 620 solidified the substantive law of state responsibility. The PCIJ delivered its famous dictum on the difference between restitutio in integrum (restoration of the original situation) and monetary compensation. compromis 620
Germany objected, arguing that the Court lacked jurisdiction to hear these counter-claims. They contended that the compromis (the special agreement) was strictly limited to determining the indemnity for the illegal expropriation, not to re-litigating the validity of the property titles from years prior. The PCIJ’s decision regarding the counter-claim established a vital precedent. The Court had to decide what constitutes a valid counter-claim in international proceedings. The judges ruled that for a counter-claim to be admissible, it must possess a "direct connection" or a "mere link" with the principal claim. The Court found that Poland’s counter-claim regarding the
In 1922, the Polish government liquidated the property of the Chorzów Factory, a large nitrate works factory located in Upper Silesia, which was under German administration before the war. The liquidation was carried out under the guise of exercising a right of liquidation provided by the Polish agrarian reform laws, but the German government argued that this action violated the Geneva Convention of 1922 regarding Upper Silesia. This ruling established the principle that a defendant