Trade Agreements, EU Law, and Occupied Territories – A Report on Polisario v Council

Speaking of occupied territories, an interesting judgment should soon come from the General Court of the European Union (GC) in Action for Annulment Frente Polisario v Council (Case T-512/12), a case with fascinating international law aspects. I attended the hearing last week and think it warrants a report.

Frente Polisario is a national liberation movement (NLM) that claims sovereignty for Western Sahara – the area between Morocco and Mauritania that has been on the UN list of non-self-governing territories since 1963, and in 1975 was the subject of a fairly inconclusive ICJ Opinion. The Frente sees Morocco as an occupying power, and challenges the EU Council decision approving the 2010 EU-Morocco Agreement on agricultural, processed agricultural and fisheries products. Given that the 2010 Agreement is a development of the 2000 EU-Morocco Association Agreement, the decision will have significant implications for the application of the latter agreement, and may thwart negotiations of the so-called “Deep and Comprehensive Free Trade Agreement”.

These agreements are all silent on the question of what constitutes Moroccan territory. However, Frente Polisario claims, de facto Morocco has been applying the 2000 Association Agreement to Western Sahara. If applied the same way, the 2010 Agreement will facilitate the export to the EU of agricultural products grown in Sahrawi land and fish caught in Sahrawi waters. If Morocco’s control of Western Sahara is illegitimate, this would violate the right of the Sahrawi people to self-determination and to permanent sovereignty over their natural resources.

The case raises a number of interesting questions:

Standing of NLMs

Frente Polisario claims that its legal personality stems directly from public international law. In fact, Frente Polisario is a textbook example of an NLM with some degree of international legal personality. It controls territory in Western Sahara, and was recognized in a 1979 General Assembly Resolution as ‘the representative of the people of Western Sahara’. Security Council Resolutions refer nominally to it, and it has been a party to UN-sponsored peace talks since 2007.

The fact that Frente Polisario derives its legal personality from the international legal order should pose no obstacle to its claim, given that non-member states have filed Actions for Annulment before. Under Article 263 TFEU, ‘any natural or legal person’ may ‘institute proceedings against an act addressed to that person or which is of direct and individual concern to them’. The Sinochem test admits as claimants both any entity that has ‘acquired legal personality in accordance with the law governing its constitution’ and any entity that ‘has been treated as an independent legal entity by the [EU] institutions’.

While the Council appears to deny Frente Polisario any standing, the Commission recognizes to the Frente a ‘functional and transitory legal personality’. If this functional legal personality is modelled upon that of the UN, as established by the ICJ in the Reparations Advisory Opinion, it grants the Frente the ‘capacity to bring international claims when necessitated by the discharge of its functions’.

In Arafat and Salah (1985), the Italian Court of Cassation recognized this capacity. NLMs such as the PLO ‘enjoy a limited legal personality. They are granted locus standi in the international community for the limited purpose of discussing … the means and terms for the self-determination of the peoples they politically control’. The Court found that the lack of explicit recognition was ‘irrelevant’, since recognition is declaratory and does not ‘constitute the international legal personality’.

A more difficult hurdle is whether the act is ‘of direct and individual concern’ to the claimant as required by Article 263 TFEU. In Inuit, the CJEU confirmed that natural or legal persons ‘satisfy the condition of individual concern only if the contested act affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons, and by virtue of these factors distinguishes them individually’.

It could be said that the 2010 Agreement affects the claimant only incidentally. But is an NLM not ‘individually’ concerned by an act that de facto applies to its territory and the people it represents? Frente Polisario’s claim is that it is not merely affected by the 2010 Agreement, but – being accepted by the UN as ‘the representative of the people of Western Sahara’ and not challenged by any competing NLM – is distinguished from all other persons. If the act in question has a ‘direct and individual effect on the legal position’ of Frente Polisario, and ‘directly prevents it from exercising its own powers’, it should have standing to file an Action for Annulment.

Jus cogens

In Kadi, the CJEU brushed aside the Court of First Instance’s view that specific regard must be paid to jus cogens under international law. However, it did restate that the EU ‘must respect international law in the exercise of its powers’, adding that ‘all [EU] acts must respect fundamental rights, that respect constituting a condition of their lawfulness which it is for the Court to review’. Under international law, the right of peoples to self-determination is quite a fundamental one. In East Timor, the ICJ held that it is ‘one of the essential principles of contemporary international law’.

It seems clear that this right comprises permanent sovereignty over natural resources. In Guinea/Senegal (1985), the Arbitral Tribunal noted that, once a national liberation process has taken an international character, this prevents the dominant power from exploiting natural resources in the secessionist territory. In a 2002 letter, the UN Under-Secretary General for Legal Affairs concluded that exploitation of mineral resources in Western Sahara would be illegal ‘if conducted in disregard of the needs and interests of the people of that Territory’.

The letter is ambiguous regarding whether exploitation must occur ‘in consultation with th[e] representatives’ of the non-self-governing people or whether it can be conducted ‘on their behalf’, as long as it is in their benefit. Before the GC, the Council and Commission made (somewhat generic) defences of trade agreements. Counsel for Frente Polisario retorted that they are the ones to decide what benefits their people, and alluded to a preference for subsistence agriculture. Regardless of whether this would benefit the Sahrawi people more than trade (I suspect most economists would disagree), it seems that this is their choice to make.

Frente Polisario argued extensively on the basis of Article 73 of the UN Charter. The Council and the Commission noted that this contradicts the Frente’s claim that Morocco is an occupying power, and Article 73 concerns the obligations of administering Powers. It would not be too difficult to argue that Article 73 sets out principles applicable to any state exercising sovereign powers outside its territory, but I suspect the claimant is appealing to the Charter because it is specifically mentioned in the preamble of TFEU. After Kadi, it is understandable – if disappointing – that parties feel safer grounding their arguments on an EU treaty rather than on a basic jus cogens rule.

Annulment or interpretation?

The 2010 Agreement falls within the purview of the Common Commercial Policy, allowing (in principle) for full judicial review. Although in matters of trade there seems to be significant leeway for EU institutions, the claim here is not the trade agreement is being violated; it is rather that the agreement, in its application if not in its wording, denies a people its right to self-determination.

One of the judges raised an interesting possibility: rather than annulling the act, the Court could interpret the 2010 Agreement as featuring a provision similar to the one now obligatory for the EU in agreements with Israel, refusing preferential access to goods originating from the West Bank.

The West Bank exclusion was confirmed in the CJEU’s 2010 Brita judgment. This judgment, however, was based on a view already expressed by the EU institutions with regard to the territory of Israel. In Frente Polisario, the Court would need to determine for itself, on the basis of international law, the territorial scope of application of the agreement.

No ‘decision’ from the UN

The Council argues that the EU would only be obliged to create a carve-out for Western Sahara if there was a ‘decision’ from the UN, giving as examples a Security Council Resolution or the ICJ’s Wall Opinion. In the latter case, however, there was no ‘decision’ by the UN; rather, the ICJ spelled out existing obligations of states, arising from a situation of fact. If the Wall Opinion is good law, the principles it embodies should be applied across the board. Thus, if, like the West Bank, Western Sahara is objectively speaking an occupied territory, the EU should be under an obligation to apply to the latter the same legal standards it is obliged to apply to the former.

Monetary Gold?

One final question concerns the extent to which the Monetary Gold principle is relevant here. Is the CJEU prevented from pronouncing on the matter because this would impinge on the rights of Morocco, which is not a party to the case? In Brita, the CJEU saw no problems in holding that the EU-Israel Association Agreement was ‘governed by international law’, and determining its lawful application accordingly. Much turns on whether we see the judgment as determining the rights of Morocco (as an international judgment would do) or as an internal judicial decision from a party to the 2010 Agreement, legitimately interpreting it as a party and determining whether it is lawful under domestic (i.e. EU) rules. I would tend towards the latter, but the fact that the doubt emerges reveals the extent to which this case touches upon difficult issues regarding the relationship between international law and a decreasingly international EU law.