The Republic of Nicaragua vs. The United States of America[109] was a case heard in 1986 by the International Court of Justice which ruled in Nicaragua's favor, and found that the United States had violated international law. The court stated that the United States had been involved in the "unlawful use of force", specifically that it was "in breach of its obligation under customary international law not to use force against another state" by direct acts of U.S. personnel and by the supporting Contra guerrillas in their war against the Nicaraguan government and by mining Nicaragua's harbors. The ICJ ordered the U.S. to pay reparations. The US was not imputable for possible human rights violations done by the Contras. The case led to considerable debate concerning the issue of the extent to which state support of terrorists implicates the state itself.[117] A consensus among scholars of international law had not been reached by the mid-2000s.[117]

U.S. foreign policy critic Noam Chomsky argued that the U.S. was legally found guilty of international terrorism based on this verdict, which condemned the United States federal government for "unlawful use of force".[118][119]

The World Court considered their case, accepted it, and presented a long judgment, several hundred pages of careful legal and factual analysis that condemned the United States for what it called "unlawful use of force" — which is the judicial way of saying "international terrorism" — ordered the United States to terminate the crime and to pay substantial reparations, many billions of dollars, to the victim.
—Noam Chomsky, interview on Pakistan Television[120]

The essence of this view of U.S. actions in Nicaruaga was supported by Oscar Schachter: "When a government provides weapons, technical advice, transportation, aid and encouragement to terrorists on a substantial scale it is not unreasonable to conclude that the armed attack is imputable to that government."

Following the rise to power of the left-wing Sandinista government in Nicaragua, the Ronald Reagan administration ordered the CIA to organize and train the Contras, a right wing guerrilla group. On December 1, 1981, President Reagan signed an initial, one-paragraph "Finding" authorizing the CIA's paramilitary war against Nicaragua.[