State continuity of the Baltic states describes the continuity of the Baltic states as legal entities under international law while under Soviet rule and German occupation from 1940 to 1991. The prevailing opinion accepts the Baltic thesis of illegal occupation and the actions of the USSR are regarded as contrary to international law in general and to the bilateral treaties between the USSR and the Baltic states in particular.
This legal continuity has been recognised by most Western powers and is reflected in their state practice. The application of the Stimson Doctrine by the Welles Declaration where a significant segment of the international community refused to grant formal approval for the Soviet conquest, the resistance by the Baltic people to the Soviet regime, and the uninterrupted functioning of rudimentary state organs in exile support the legal position that sovereign title never passed to the Soviet Union, which implied that occupation sui generis (Annexionsbesetzung or "annexation occupation") lasted until re-independence in 1991. Thus the Baltic states continued to exist as subjects of international law.
The official position of Russia is a continuation of the Soviet position that Estonia, Latvia, and Lithuania were not annexed by the Soviet Union but joined of their own accord in 1940. Russia insists that incorporation of the Baltic states gained international de jure recognition by the agreements made in the Yalta and Potsdam conferences and by the Helsinki accords. They have also argued that in accordance to the internal Soviet laws and constitution, restoration of independence was illegal and the Baltic republics could only become newly created sovereign entities via the secession laws of the USSR. According to this position, all previous treaties, such as Treaty of Tartu, are invalidated, and all possible claims by Baltic states for monetary compensation have no legal basis. This alternate thesis on continuity of the Baltic states and its related consequences has fueled a fundamental confrontation between Russia and the Baltic states.
The legal principle of ex injuria jus non oritur can be impacted by the competing principle of ex factis jus oritur in the application of restitutio in integrum. On one hand, de jure recognition of Baltic incorporation on the part of other sovereign nations outside the Soviet bloc was largely withheld based on the fundamental legal principle of ex injuria jus non oritur, that as no legal benefit can be derived from an illegal act; thus the annexation of the Baltic states was held to be illegal. On the other hand, de facto interruption of statehood due to foreign occupation for a period of fifty years giving rise to the fundamental legal principle of ex factis jus oritur, as well as irrevocable territory and demographic changes made the Baltic case much more complex than mere restitutio in integrum.
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