Trade Agreements, EU Law, and Occupied Territories (2): The General Court Judgment in Frente Polisario v Council and the Protection of Fundamental Rights Abroad

This is a follow-up to my July post on Action for Annulment Frente Polisario v Council (Case T-512/12), a case before the General Court of the European Union (GC) in which Frente Polisario – the National Liberation Movement for Western Sahara – seeks the Annulment of the EU Council decision adopting the 2010 EU-Morocco Agreement on agricultural, processed agricultural and fisheries products. The GC delivered its judgment yesterday, both recognizing the standing of Frente Polisario and granting the (partial) annulment of the decision, with implications for EU-Morocco relations and for EU external relations law more broadly.

(1) Standing of Frente Polisario under Article 263 TFEU

As regards standing, the most striking aspect of the judgment is that the Court accepted the Frente’s entitlement to plead as a ‘moral person’, with the ‘necessary autonomy’ to challenge a decision of the EU legislator (paras. 50-53), without reference to the sui generis character of Frente Polisario or to the unique situation of Western Sahara. This would seem to open the door for other ‘autonomous entities’, even those with no claim to international legal personality, to challenge EU decisions under Article 263 TFEU.

By the same token, the Court fell short of recognizing the Frente’s legal personality under international law. The preference for constitution under Sahrawi law (60) appears slightly at odds with the grounds used to determine its autonomous existence: participation in UN-sponsored negotiations, an agreement signed with Mauritania, and its status as a party to a dispute regarding the status of the non-self-governing territory of Western Sahara (54-59).

The Commission argued that the adopting act was not ‘of direct and individual concern’ to the claimant, because the 2010 Agreement did not specifically refer to Frente Polisario or Western Sahara. However, as the ‘sole other interlocutor’ participating in the UN-sponsored negotiations to determine the definitive status of Western Sahara (112-113), the Frente was ‘individually concerned’ by a decision which de facto applies to the territory over which it has a UN-recognized dispute with Morocco. Noting the existence of significant treaty practice under the Association Agreement with Morocco, the Court reproached the Commission and the Council’s attempt to look the other way. It noted:

…the EU institutions were conscious of the application, by the Moroccan authorities, of the provisions of the Association Agreement with Morocco to the part of Western Sahara controlled by Morocco, and did not oppose this application. On the contrary, the Commission cooperated, to a certain extent, with the Moroccan authorities in this application and recognized its results … (99). Their omission on this point demonstrates that they accept, at least implicitly, the interpretation of the Association Agreement with Morocco and of the agreement approved by the challenged decision, according to which these agreements apply also to the part of Western Sahara controlled by Morocco (102).

(2) Trade Agreements and the Duty to Protect Fundamental Rights Abroad

As regards the substantive issue of the legality of the challenged agreement, the Court found there is no ‘absolute prohibition’ for the EU Institutions to conclude treaties applied to disputed areas (146, 205). Under international law, the GC noted, the UN legal officer that examined the issue of Western Sahara in 2002 did not conclude that there was such an absolute prohibition either (210, 215). This would seem logical, given that there are very many disputed areas; the mere opposition to sovereignty of a state over an area cannot serve to preclude this state from entering into agreements concerning the area. The real question, then, concerns the extent to which EU Institutions must take into account the concrete situation in states with which they sign agreements.

The Court recognized to EU Institutions a broad power of appreciation (‘large pouvoir d’appréciation’) in signing international agreements. Only a ‘manifest error of appreciation’ could lead the Court to annul an agreement. The obligation of Institutions in this regard was ‘to examine, with impartiality, all the relevant elements in the case at hand, elements which support the conclusion drawn from them’ (225). This includes, in an agreement applicable to a non-self-governing territory, an assessment of its effects over the fundamental rights of the population of that territory.

Given the absence of international recognition of Moroccan sovereignty over Western Sahara, and Morocco’s disregard for Article 73 of the UN Charter, which requires UN members administering territories to ‘promote to the utmost .. the well-being of the inhabitants’ of non-self-governing territories, the EU had special reason to ensure compliance with this obligation. In this regard, the Court rejected in strong terms the Council’s argument that the EU could not be responsible for actions committed by third states with which it merely signed an agreement:

… if the EU allows the export to its Member States of products originating from this other country that have been made or obtained in conditions that do not respect fundamental rights of the population of the territory from where they originate, it risks indirectly encouraging these violations or benefitting from them. (231)

…the Council … in the exercise of its broad power of appreciation … should itself ensure that there is no evidence of exploitation of the natural resources of the territory of Western Sahara under Moroccan control to the detriment of its inhabitants and violating their fundamental rights. It should not limit itself to considering that it is incumbent upon the Kingdom of Morocco to ensure that no exploitation of this nature has taken place. (241)

… the Council has violated its obligation to examine, before the adoption of the challenged decision, all the elements of the case at hand. As a consequence, the Court must grant the application and annul the contested decision insofar as it approves the application to Western Sahara of the agreement referred therein. (247)

This sequence includes a number of important elements. First, the EU is under an obligation to ensure respect for the fundamental rights of non-EU nationals in non-EU territory. Second, ‘entirely neutral’ agreements, which do not require the violation of fundamental rights, may still fail to conform to this obligation if they favour the occurrence of such a violation. Third, the fact that an agreement may ‘indirectly encourag[e]’ the violations of fundamental rights, or that the EU ‘benefit[s] from them’, is sufficient to trigger the duty to take into account the specific elements of the agreement. In other words, even if a violation of fundamental rights is not an object of the agreement, such a violation may be its consequence or an effect.

(3) The Judgment and EU-Morocco Relations

In terms of its effects on the case at hand, the judgment does not annul the 2010 Agreement in its entirety but solely insofar as it is applied in Western Sahara. Although the 2000 Association Agreement is not formally affected by the judgment, logic would seem to require that it have its applicability restricted in a similar manner. In fact, if the importation of goods made in non-self-governing territory in violation of their fundamental rights is really incompatible with the EU human rights obligations, it would make sense for the EU to suspend the application of the entirety of its trade agreements to Sahrawi territory, possibly including imports under WTO Most-Favoured Nation rules.

Given that Morocco itself does not distinguish between products made in Western Sahara and products made in non-Sahrawi Moroccan territory, implementing this decision may require the EU to take measures similar to those which it has recently determined with regard to Israeli goods originating from occupied Palestinian territory. In response, Israel threatened to bring a dispute to the WTO. Morocco could presumably do the same.

Besides the territorial argument, the EU could try to defend itself under GATT Article XX. But there is so far no WTO case law establishing the extent to which members may take trade-restrictive, otherwise WTO-inconsistent measures, and justify them with the aim of protecting individuals outside their own territory. Contrary to what occurs in EU law, under which the Institutions’ discretionary power of appreciation permits inconsistent foreign policy action (156, 164), GATT Article XX does not allow WTO members to arbitrarily discriminate between countries ‘where the same conditions prevail’.

(4) Obligations of EU Institutions: Will the Mountain Give Birth to a Mouse?

A second set of questions concerns the obligations of EU institutions in future (and perhaps current) trade agreements. The judgment could be interpreted as recognizing duties for EU Institutions entering into agreements with third states, both (i) a ‘weak’ duty to ensure that these agreements are not themselves the source of violations of fundamental rights and (ii) a ‘strong’ duty to ensure that agreements do not ‘indirectly encourage’ such violations, and that the EU does not ‘benefit’ from them.

Besides its implications for other disputed territories, the reasoning in the Frente Polisario judgment may be used to challenge other trade agreements, which cover non-disputed territories but which may facilitate production in ways that deny populations their rights under the Charter of Fundamental Rights – the Court makes a point of referring to eleven of these rights. Employing counterfactuals, economists would probably be able to demonstrate that EU trade agreements with states that have low labour standards or that overlook the use of child labour ‘indirectly encourage’ the multiplication of these practices.

A different reading of the decision may lead to the opposite impression. Paragraph 244 emphasizes that the Council should have ‘conducted an assessment’ of the situation in Western Sahara. The ‘manifest error of appreciation’ justifying the annulment was its failure ‘to examine’ the elements of the case (225, 247). Could the Council simply have requested a report on the situation in Western Sahara, appended it to its decision, and concluded the exact same agreement without having exceeded its ‘broad discretionary power of appreciation’? In this case, the decision would generate more paperwork without necessarily leading to any changes on the ground.

On the other hand, the judgment specifies that the Council’s examination must be ‘careful and impartial’, and the elements available must ‘support the conclusion drawn’ (225). In this case, the obligation of EU Institutions signing agreements with third states is still procedural: to conduct an assessment of the situation of fundamental rights and of the impact of the agreement. However, EU Courts are not limited to examining whether the assessment was conducted, but must ensure that it was conducted carefully and impartially, and that the elements presented in the assessment support the conclusion drawn. This means that EU courts will not conduct de novo review of the assessment, but may still establish that failure to conduct a careful and impartial assessment of the impact of the agreement on fundamental rights, or the signature of an agreement incompatible with the results of this assessment, justify the annulment – even if partial – of the decision adopting the agreement.