The United Nations Compensation Commission.

As the United Nations Compensation Commission (UNCC) closed its books at the end of the millennium, it had succeeded in making payments totalling nearly $5 billion to approximately 1.5 million claimants. The Commission also commenced making the first payments to Governments and corporations. By the end of 2000, it expects to have paid out an additional $3.5 billion and thereby complete payment of all compensation awarded to individual claimants seeking less than $100,000. However the bulk of the larger and more complex claims. At its most recent session in March 2000, the UNCC Governing Council awarded over $964 million to 403 of these claimants.

UNCC is a subsidiary organ of the Security Council and was established in 1991 to process claims and pay compensation for losses resulting from Iraq's invasion and occupation of Kuwait. The Council established Iraq's legal responsibility for such losses in resolution 687 (1991) of 3 April 1991:

"Iraq ... is liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign Governments, nationals and corporations, as a result of Iraq's unlawful invasion and occupation of Kuwait."

"The Commission is not a court or an arbitral tribunal before which the parties appear; it is a political organ that performs an essentially fact-finding function of examining claims, verifying their validity, evaluating losses, assessing payments and resolving disputed claims; it is only in this last respect that a quasi-judicial function may be involved."

There days after resolution 687 (1991) was adopted, Iraq wrote to the United Nations Secretary-General and the Security Council President to accept its terms. The framework for UNCC was outlined in a report of the Secretary-General dated 2 May 1991, which stated:

The United Nations Compensation Fund and the UN Compensation Commission set up to administer it were formally established by the Security Council on 20 May 1991 under resolution 692 (1991). UNCC comprises the Governing Council, the Panels of Commissioners and the Secretariat.

The Governing Council is the policy-making organ of the Commission. It is composed of representatives of the current members of the Security Council. It establishes the criteria for the compensability of claims, the rules and procedures that govern the processing of the claims, the guidelines regarding the administration and financing of the Fund, and the procedures for the payment of compensation. It meets four times a year, usually in March, June, September and December. In between sessions, its Working Group holds informal meetings to discuss specific issues.

There are today 42 Commissioners, each is appointed for a fixed-term to serve on a particular three-member Panel of Commissioners. The Panels have an essentially fact-finding function of examining claims, verifying their validity, evaluating losses, assessing awards and resolving disputed claims. They are assigned an identified instalment of claims to resolve, and must deal with claims submitted to them within strict time limits specified by the Governing Council.

Essentially, the Panels are entrusted with three tasks: to determine whether the various types of losses alleged by the claimants are within the jurisdiction of the Commission, i.e. whether they were caused directly by Iraq's invasion and occupation of Kuwait; to verify whether the alleged losses that are in principle compensable have, in fact, been incurred by a given claimant; to determine whether the compensable losses were incurred in the amount claimed, and, if not, the appropriate quantity of the loss based on the evidence before the Panel. The Panels of Commissioners report in writing to the Governing Council through the Executive Secretary on the claims reviewed and the amount recommended for allocation to each Government or other entity for each claim. The Council then considers the Panel's report and recommended awards, and may approve or revise such awards.

The Commissioners are chosen for their integrity, experience and expertise in such areas as law, accounting, loss adjusting, environmental damage assessment and engineering. They are selected from among renowned international jurists and other professionals, with geographical representation as another important factor in their selection. The 55 Commissioners appointed to date represent approximately 40 different nationalities.

The secretariat of the Commission services the Governing Council and the Panels of Commissioners, providing administrative, technical and legal support. It is headed by an Executive Secretary, who is appointed by the UN Secretary-General. It is presently comprised of 240 staff members, who are recruited on a wide and balanced geographic basis and represent over 60 different nationalities. Many of its members are lawyers, loss adjusters, accountants and computer specialists. The number of secretariat staff is now at its peak; starting in 2001, as the Panels complete their work, there will be a reduction in staff.

The last of the individual claimants from the categories deemed urgent for humanitarian reasons were resolved in June 1999, and thus the Commission is now focusing solely on the larger individual claims, as well as corporate and governmental claims.

There are approximately 5,000 of category "E" and "F" claims to resolve, many of which are extremely complex or large. They have been broken down into a number of sub-categories, including oil-sector claims, construction and engineering claims, losses in connection with evacuating citizens, damage to government and diplomatic premises, and damage to the environment. The first oil-sector claim to be resolved was the "Well Blow-out Control" claim submitted by the Kuwait Oil Company. It concerned the cost of extinguishing the oil-well fires left behind as Iraqi troops retreated from Kuwait. In December 1996, the Council approved the award of $610,048,547 recommended by the Panel. Since then, many other claims in the "E" and "F" categories have been resolved, and it is those which have been awarded compensation that started to receive payment at the end of last year, together with claims in other categories.

In August 1997, the Executive Secretary submitted to the Governing Council a comprehensive plan for completing the processing of all of the Commission's remaining claims by mid-2003. The UNCC Work Programme (1997-2003) sets out a series of timetables for the processing of each category and sub-category of claims. The Work Programme provides for the last claims to go before the Council in 2003. After that point, the processing will be complete and the size of the Commission will be reduced significantly. However, the reduction will commence before then, in 2001, when the processing of a number of Government claims will have been completed.

Thus, over the next three and a half years, the Commission is expected to resolve approximately $270 billion of claims. The scale of the damage clearly demonstrates the enormous financial cost of war, which, along with the human costs, will continue to be felt for many years.

The Claims

The UN Compensation Commission has accepted only claims filed by Governments on their own behalf or on behalf of their nationals and corporations, and claims submitted by international organizations on their own behalf or on behalf of individuals not in a position to have their claims submitted by a Government. Since 1991, UNCC has received over 2.6 million claims, seeking a total amount of compensation of over $330 billion. Ninety-six Governments have submitted claims on behalf of their nationals, corporations or themselves. Thirteen offices of the United Nations Development Programme, the Office of the United Nations High Commissioner for Refugees, and the United Nations Relief and Works Agency for Palestine Refugees in the Near East, have also submitted claims.

The Claims were divided into six different categories:

Category A: Claims of those who had to leave Iraq or Kuwait.

Category B: Claims of those who suffered personal injury or whose spouse, child or parent were killed.

Category C: Claims of individuals for up to $100,000.

Category D: Claims of individuals for damages above $100,000.

Category E: Claims of corporations and other legal entities.

Category F: Claims of Governments and international organizations.

All filing deadlines have now expired, with the exception of claims put forward on behalf of missing persons and claims for damage and losses resulting from landmine and ordnance explosions.

The Compensation Fund

The compensation paid to claimants is drawn from the UN Compensation Fund which receives 30 per cent of the revenue derived from the sale of Iraqi oil, in accordance with the "oil-for-food" scheme which commenced under resolution 986 (1995). On 17 December, the Security Council adopted resolution 1284 (1999) which permits Iraq to sell any amount of petroleum and petroleum products for a 12-month period. The majority of the revenue is directed towards the humanitarian programme, which provides relief to the Iraqi population in the form of food, medical supplies, water and sanitation equipment, agricultural supplies, electrical equipment and education supplies.

The rise in the price of oil has resulted in a dramatic increase in the income for both the humanitarian programme and the Compensation Fund. This very positive development will allow the acceleration of the payment timetable and thus alleviate the considerable hardship endured by many of the claimants.

The Environment Claims

Many people still have vivid memories of the oil wells burning, the black smoke billowing, and the spreading of oil across land and sea--scenes captured on film and shown around the world during the time of Iraq's invasion and occupation of Kuwait.

The United Nations responded to the worldwide concern for the environmental impacts those images raised when it included "environmental damage" in the claims that could be presented to the Compensation Commission. As a result, UNCC is engaged in a precedent-setting activity of processing claims for environmental losses valued by claimants at approximately $ 48 billion. The Panel of Commissioners will review the claims to make certain that each meets the established requirements. With the help of specialized experts, the Panel will value the claims it recommends for awards, a task that has been said represent the world community's first deliberate assessment and valuation of the environmental consequences of war.