Qatar under Siege: Chances for an Article XXI Case?

For more than six months now, the richest country of the world has been under an embargo imposed by its Arab neighbours, apparently motivated by their discontent over Qatar’s increasingly independent course in international affairs. The embargo raises controversial questions under international law, for example in light of the principle of non-intervention and the human rights of the people affected. For now, Qatar has chosen to contest the embargo’s legality at the World Trade Organization (WTO), requesting consultations with the UAE (DS526), Bahrain (DS527), and Saudi Arabia (DS528). The dispute could, for the first time, require a WTO panel to interpret Article XXI GATT, the security provision that has been described as ‘an unreviewable trump card, an exception to all WTO rules that can be exercised at the sole discretion of a Member State’ (Roger Alford 2011; see also the blog by Diane Desierto here).

While the cases against Bahrain and Saudi Arabia have not moved past the consultations phase, Qatar has requested the establishment of a panel in the case against the UAE, and the Dispute Settlement Body (DSB) has approved this request on 22 November. Qatar’s claim concerns a long list of complaints under the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). In response, the UAE has explicitly referred to the security exceptions of the relevant agreements, arguing that the measures were a response to Qatar’s funding of terrorist organizations and therefore justified in the interest of national security.

Article XXI GATT stipulates, amongst other things, that nothing in the GATT ‘shall be construed’ … ‘to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests’, in three different contexts, including those of ‘war or other emergency in international relations’. The language of Article XXI suggests it is a so-called ‘self-judging clause’, justifying measures which are considered necessary by the State that adopts them. The crucial legal question is to what extent the Article allows for review. According to the UAE, the WTO dispute settlement system is neither empowered nor equipped to hear disputes concerning national security. Qatar, however, argues that while Members have the right to adopt bona fide security measures, such measures remain subject to WTO oversight.

So far, GATT and WTO practice has not provided a conclusive answer on the reviewability of Article XXI defences. A Decision on Article XXI adopted by the GATT Council in 1982 only stipulates that contracting parties ‘should be informed to the fullest extent possible’ of Article XXI measures, while they ‘retain their full rights under the General Agreement’. In the context of an EC complaint concerning the US embargo against Cuba (DS38), the US urged the EC to ‘consider whether the WTO was well equipped to address, let alone resolve, the type of disagreement they had brought to the DSB’, and the panel proceedings were ultimately discontinued. The limited practice under Article XXI suggests that Members have an interest in keeping the legal status of the security exception ambiguous and prefer to settle disputes through other means (Lindsay 2003). At the same time, the questions surrounding Article XXI have become more controversial in the context of the sanctions adopted by and against Russia in the context of the Ukraine conflict (Neuwirth and Svetlicinii 2015, Yeong Yoo and Ahn 2016). It remains to be seen whether Article XXI will be directly addressed in this context (see DS512; DS525; DS532).

Outside the context of Article XXI, it was held by the Article 22.6 arbitrators in the EC – Bananas dispute (DS27) that whereas the self-judging language of Article 22.3(b) and (c) of the Dispute Settlement Understanding leaves a ‘certain margin of appreciation’ to the Member concerned, this did not bar their ‘authority to broadly judge whether the complaining party … has considered the necessary facts objectively and whether, on the basis of these facts, it could plausibly arrive’ at its conclusions (para 52). Several other international courts and tribunals have also discussed the reviewability of self-judging clauses, as described in a comparative analysis by Stephan Schill and Robyn Briese (2009). In Nicaragua v United States, the ICJ affirmed that it had jurisdiction to interpret a security exception that was not phrased as a self-judging clause, contrasting it with Article XXI GATT (para 222). Yet in Djibouti v France, the Court did not accept the inverse proposition according to which a self-judging clause would not be for the Court to review. Instead, the Court found that France’s application of the relevant clause was governed by the principle of good faith, and as such reviewable by the Court (para 145). Similar positions have been adopted by several investment arbitration tribunals ruling on the Argentine economic crisis, most explicitly in LG&E v Argentina (para 214).

In the debate about whether Article XXI measures can be reviewed, good arguments can be raised on both sides. The provision is undeniably phrased as a self-judging clause, unlike for example the clause at stake in the ICJ’s Nicaragua case, and lacks the restrictive language found in the chapeau of Article XX. Moreover, it could be argued that questions of national security fall outside the competence and expertise of the WTO. In response, one could emphasize that even if Article XXI is a self-judging clause, its phrasing suggests that some form review is legitimate: Article XXI justifies only ‘essential’ and not any security interests, and lists three specific spheres of application (Hahn 1991). In addition, the absence of any form of review would allow Members to abuse the security exception to further other interests (Akande and Williams 2003). Along these lines, a GATT panel wondered in its unadopted report of 13 October 1986 on the US embargo on Nicaragua: ‘[i]f it were accepted that the interpretation of Article XXI was reserved entirely to the contracting party invoking it, how could the contracting parties ensure that this general exception … is not invoked excessively or for purposes other than those set out in this provision?’ (para 5.17).

Once a WTO panel would accept that the application of Article XXI is subject to some form of review, it would have to clarify the applicable standard of review. The pertinence of a good faith standard seems widely accepted, but its actual content is difficult to define. The ICJ considered in Gabčíkovo-Nagymaros that ‘[t]he principle of good faith obliges the Parties to apply [a treaty] in a reasonable way and in such a manner that its purpose can be realized’ (para 142). It is questionable, however, if this provides a useful standard of review. In considering the object and purpose of the GATT, it is clear that Article XXI justifies measures that would normally be diametrically opposed to the GATT’s object and purpose. The crucial question is how to strike a balance between the interests of free trade on one hand and national security on the other in situations where they are alleged to clash.

Several other elements could be used to evaluate an invocation of Article XXI. For instance, one could envisage an obligation for the Member imposing security measures to inform the other Members and to state reasons. In addition, Wesley Cann (2001) has suggested that in applying Article XXI, Members are bound by the principle of non-discrimination, which would mean that if the alleged security threat exists not only in the targeted Member but elsewhere as well, the imposition of measures on only one Member would violate the principle of good faith. Finally, review of Article XXI measures could focus on their proportionality and the availability of less trade-restrictive means.

In the concrete case of the Qatar embargo, it is hard to see how the UAE has informed Qatar and other Members of the measures adopted and of their justification. Instead, Qatar was provided with 13 demands, most of which seem difficult to relate to the UAE’s ‘essential security interests’. Under the non-discrimination standard, it is unclear why the UAE’s concerns about support of terrorism, ties with Iran and military cooperation with Turkey would apply exclusively to Qatar. The proportionality standard causes problems too, as a full-scale, unannounced embargo as the one imposed by the UAE seems difficult to justify in proportion to the security threats allegedly posed by Qatar. However, even if the different elements mentioned above could be useful in assessing the good faith of the UAE, the allocation of the burden of proof would be controversial. Moreover, a review of proportionality and non-discrimination entails relatively strict scrutiny, which is difficult to square with the self-judging language of Article XXI.

In the end, the crucial question for the panel is not primarily whether the UAE’s embargo qualifies as a legitimate security measure, but whether it can be reviewed at all. A rigorous review under Article XXI would evoke complaints of overreach by the WTO dispute settlement system, which is already in serious trouble. On the other hand, a formal decision concluding that security measures are outside the scope of WTO review will confirm interpretations of Article XXI as a carte blanche, which could also threaten the credibility of the system. Two years ago, the Russian Federation urged the Members of the WTO to create more clarity about the interpretation and application of security exceptions (WT/MIN(15)/W/14). It may now be up to a panel (and ultimately the Appellate Body) to tackle this difficult task.