Defences and indispensable incidental issues: the limits of subject-matter jurisdiction in view of the recent ICJ ICAO Council judgments

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On 14 July 2020, the ICJ issued its judgments on the cases of the Appeal Relating to the Jurisdiction of the ICAO Council under Article 84 of the Convention on International Civil Aviation (Bahrain, Egypt, Saudi Arabia and United Arab Emirates v. Qatar) and Appeal Relating to the Jurisdiction of the ICAO Council under Article II, Section 2, of the 1944 International Air Services Transit Agreement (Bahrain, Egypt and United Arab Emirates v. Qatar). The judgments of the Court – which were to a large extent materially identical – discussed a very controversial and important question in international dispute settlement: whether in the course of examining an applicable defence, a dispute settlement body may also examine and determine, incidentally, all other issues that arise in this context and are necessary to make a ruling on the applicability of the defence.

This problem arises primarily in the context of two defences: self-defence and countermeasures. Successful invocation of self-defence requires the determination of the existence of a prior armed attack. Similarly, the defence of countermeasures is only available as a response to a prior internationally wrongful act. Determination of such issues may fall outside the jurisdiction of the dispute settlement body as established in that particular dispute. In fact, it may even fall outside its jurisdictional field in general, i.e. the general class of cases in respect of which a court is empowered to exercise its functions. In such cases, the dispute settlement body is faced with a genuine dilemma. An expansive approach asserting jurisdiction over incidental matters may jeopardise the principle of consent and provide a back door for states to raise issues that would otherwise fall outside the scope of jurisdiction of the dispute settlement body as independent claims (or counterclaims). On the other hand, a strict approach to the scope of jurisdiction entails the danger that a respondent cannot invoke an otherwise applicable defence.

This problem was discussed in the recent ICAO Council cases, which were related to one of the many aspects of the broader situation of tension between the parties. Bahrain, Egypt, Saudi Arabia and the United Arab Emirates (known as ‘the Quartet’) imposed in June 2017 an air, land and sea blockade and severed all diplomatic and trade ties with Qatar. According to the Quartet, the embargo was imposed on Qatar for allegedly supporting and harbouring terrorist individuals and organisations and for allowing them to use Qatar-based and Qatar-sponsored media platforms (notably, Al-Jazeera) to spread their messages. The Quartet also accuses Qatar of meddling in their internal affairs. The above actions, according to the Quartet, are in violation of, among other rules, the so-called Riyadh Agreements, a series of agreements concluded within the Gulf Cooperation Council aiming to ensure stability in the region and restore the already shaken relations among the Council members (see this previous post). Qatar has repeatedly denied these allegations and has also initiated dispute settlement proceedings against members of the Quartet for various aspects of their embargo before the ICJ, the Committee on the Elimination of Racial Discrimination, the WTO and the ICAO Council.

The present cases before the ICJ originated in Qatar’s challenge before the ICAO Council of the Quartet’s aviation restrictions against Qatar-registered aircrafts. In those proceedings, Qatar argued that these measures were incompatible with the Quartet’s obligations under the 1944 Chicago Convention on International Civil Aviation and the International Air Services Transit Agreement (IASTA) also of 1944. In response, the Quartet argued that the ICAO Council lacked jurisdiction over these cases under the respective conventions ‘since the real issue in dispute between the Parties involved matters extending beyond the scope of [these] instrument[s], including whether the aviation restrictions could be characterized as lawful countermeasures under international law’ [para 24 of the judgments]. The ICAO Council rejected these preliminary objections. The Quartet instituted appeals from the Council’s decisions on jurisdiction before the ICJ under Article 84 of the Chicago Convention and Article II, Section 2, of IASTA.

The ICJ in its judgments, found that the ICAO Council did not err in rejecting the Quartet’s objections. The Court firstly confirmed that ‘[t]he prospect that a respondent would raise a defence based on countermeasures in a proceeding on the merits … does not, in and of itself, have any effect on … jurisdiction’ (para 49, c.f. the similar finding of the Court in its 1972 India v Pakistan ICAO Council judgment with respect to defences under the law of treaties, paras 31-32). Judge ad hoc Berman suggests in his separate opinion that from this finding, it necessarily follows that, by the same token, ‘the invocation of a wider legal defence cannot have the effect of extending or expanding the Council’s competence’ and that this ‘is implicit in what the Court has said’ [para 16]. Indeed, the Council’s jurisdiction would not be expanded. Nonetheless the Court’s judgment implies that the limits of the Council’s existing subject-matter jurisdiction are broader than those suggested by the Applicants. The second finding of the Court explicitly states that ‘the integrity of the Council’s dispute settlement function would not be affected if the Council examined issues outside matters of civil aviation for the exclusive purpose of deciding a dispute which falls within its jurisdiction … Therefore, a possible need for the ICAO Council to consider issues falling outside the scope of [the Chicago Convention or the IASTA] solely in order to settle a disagreement relating to the interpretation or application of [the respective convention] would not render the application submitting that disagreement to it inadmissible’ (para 61). In other words, the ICJ essentially confirmed that the ICAO Council’s jurisdiction extends to incidental matters that arise in the context of the defence of countermeasures to the extent that they are necessary for the Council to discharge its function under the Chicago Convention and the IASTA and decide on the matters brought before it.

Although the judgment referred to the competence of the ICAO Council, a dispute settlement organ that, as the Court stipulated, is not a ‘judicial institution in the proper sense of that term’, its findings a fortiori apply to international adjudicative bodies (para 60, but c.f. Declaration of Judge Gevorgian). Although this is the first time that such an expansive approach to the limits of an adjudicative body’s jurisdiction ratione materiae is so clearly articulated by the Court, its findings in this case are consistent with past jurisprudence on matters of jurisdiction and applicable law.

As the ICJ affirmed in the Bosnian Genocide case, in order to determine whether an internationally wrongful act has taken place and the legal consequences of such an act the Court can have recourse not only to the convention that constitutes the basis of its jurisdiction but also to the rules of general international law on state responsibility (para 149). This implies that the Court can also apply the defences under the law of state responsibility, which may preclude the wrongfulness of an act despite a finding of prima facie breach. The ICJ has further established that an adjudicative body ‘is fully empowered to make whatever findings may be necessary’ in order ‘to ensure that the exercise of its jurisdiction over the merits, if and when established, shall not be frustrated’ and ‘to provide for the orderly settlement of all matters in dispute’(Nuclear Tests, para 23). Besides, it is firmly established that jurisdiction to determine a breach implies jurisdiction to award compensation, or more generally, to rule on the content of a state’s international responsibility (Factory at Chorzów p 21). It follows that the Court is empowered to make all necessary findings in the context of applicable defences as they are indispensable for a determination of whether the respondent bears international responsibility and the ensuing legal consequences. Echoing the Factory at Chorzów, the latest ICAO Council judgments (para 61) seem to consider such determination as squarely within the power of a dispute settlement body to rule on ‘differences relating to the application’ of the treaty in question (Factory at Chorzów p 21).

As the Court implicitly confirmed in the latest ICAO Council judgments, findings in the context of an applicable defence cannot be considered as independent verdicts. They form part of the reasoning for the determination of rights and obligations that are indeed within its jurisdiction. It should, however, be noted that the power of an adjudicative body to examine applicable defences and their requirements should not be used as an excuse for the Court to discuss issues which are not indispensable for the purposes of the judgment or proceed with obiter dicta on issues that lie outside its scope of its jurisdiction. For example, in Oil Platforms, deciding on the US defence and all the issues that arose in its context (i.e. the requirements of self-defence under general international law) was not necessary for the Court to discharge its judicial function. The Court would have reached the same conclusion without any reference to the US defence and to general international law on the use of force, as it later found that the actions of the US were not in breach of the substantive provisions of the 1955 Treaty of Amity.

Lastly, an important implication of the Court’s judgment is that its findings on the limits of jurisdiction ratione materiae were made by reference to the ICAO Council, a specialised dispute settlement body with limited competence on matters of civil aviation. Thus, they may apply by analogy to all adjudicative bodies regardless of their jurisdictional field, such as the WTO panels and Appellate Body (or even investment arbitral tribunals, subject to questions of jurisdiction ratione personae). It should be noted that so far, the approach of the WTO and arbitral tribunals on this matter is very different from the ICJ’s findings. In Mexico-Soft Drinks the WTO Appellate Body found that ‘WTO panels and the Appellate Body [cannot] become adjudicators of non-WTO disputes’ (para 78) and thus, cannot examine whether a prior non-WTO internationally wrongful act has taken place in the context of a countermeasures defence. A similar approach was taken by the NAFTA arbitral tribunals in the cases of Archer Daniels and Corn Products International against Mexico.

Admittedly, the ICJ’s expansive approach to subject-matter jurisdiction stretches the limits of state consent to international dispute settlement. It will also add to the existing criticism and scepticism of certain states relating to the powers of international adjudicative bodies (see e.g. the US decision to block appointments to the WTO Appellate Body due to alleged judicial overreach). However, international dispute settlement should not ignore the inextricable link between international rules and legal defences. A restrictive approach could result in unfair judgments which fail to objectively settle the dispute at hand and create uncertainty regarding the scope of the international obligations assumed by states.

 

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Lorand Bartels says

July 23, 2020

Very nice note. But is it different in the context of claims, given that a determination on an incidental issue can in reality be the point of the claim? Are defences special?

Bruno Gelinas-Faucher says

July 23, 2020

Thank you for this excellent post. It’s interesting to note that Qatar Airways has announced just yesterday that it was initiating investment arbitration proceedings against the Quartet: https://www.argusmedia.com/en/news/2125419-qatar-airways-seeks-5bn-from-blockading-nations

The defending States will most likely raise a similar countermeasure argument. As such, it will be the first testing ground to assess the impact of the new ICJ approach and compare it to the old NAFTA cases (which were themselves split on the issue).

Anna Ventouratou says

July 23, 2020

Dear Lorand,

Many thanks for this question. This issue is extremely interesting. The findings of the Court in this case were by reference to the defence of countermeasures. However, indeed, on the basis of the language used in this finding one could make the argument that the subject-matter jurisdiction of a dispute settlement body entails jurisdiction to decide all matters that are indispensable 'in order to settle a disagreement relating to the interpretation or application', not just in the context of an applicable defence of the Respondent but also, potentially, in the context of the Applicant’s claim. At the same time there are cases which suggest that the Court should 'isolate the real issue in the case and to identify the object of the claim'(Nuclear Tests) or to 'evaluate where the relative weight of the dispute lies' (Chagos MPA). These are complicated questions which have so far been approached mostly as issues of interpretation of the treaty at hand. The relevant findings also hint, arguably, towards the application of an abuse of right/good faith formula with respect to the Applicant’s claims.

However, the matter is different in the context of a Respondent’s defence. The Respondent is faced with a case against it alleging that it bears international responsibility for an internationally wrongful act. The Respondent is entitled to invoke any applicable defences and the Court, in order to decide whether a breach has taken place and the ensuing consequences, should be able to examine such defence. At the same time, if the Court rules that the case is inadmissible altogether due to lack of jurisdiction to examine a defence then the Respondent would be able to ‘throw out’ all types of disputes simply by asserting that a defence is applicable. I believe that this is what advocates for an expansive approach to jurisdiction ratione materiae in the context of the Respondent’s defence, an argument that does not necessarily apply by analogy to the Applicant’s claims.

These are some initial thoughts on this very interesting issue which certainly requires further elaboration. Many thanks again for this.

Anna Ventouratou says

July 23, 2020

Dear Bruno,

Many thanks for the comment! Indeed this will be a very interesting case and will probably raise this issue again in the context of investment arbitration. The tribunal will need to revisit not only the issue discussed here regarding the limits of jurisdiction ratione materiae but also the nature of the investors’ rights as direct or derivative (on which indeed previous tribunals were split) and issues of jurisdiction ratione personae and representation as the state of nationality is not a party to the investment dispute.