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Anna Ventouratou Lecturer in International Trade Law, School of Law, University of Sheffield Sheffield UK
DPhil Candidate in Public International Law, Wadham College, University of Oxford Oxford UK

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Abstract

This article focuses on the legality of unilateral economic sanctions that consist in the non-performance of obligations in the field of economic relations under relevant applicable treaties, and on the role that international adjudicative bodies can play in drawing a line between legal and illegal economic sanctions. It revisits the scarce relevant litigation before the ICJ and the WTO, pinpointing the grey areas in the law applicable to economic sanctions, on which further clarification is needed. The article argues that international adjudication can play a crucial role in such process of clarification, not only by elucidating the relevant legal regime, but also by triggering State reactions, which in turn can prompt legal developments in this area. Once the “rule-ness” of the relevant legal regime is firmly established, the need for court “supervision” will decrease, thus making it possible to envisage a fair system of international law enforcement without international courts.

1 Introduction

Economic “sanctions”,1 or the threat thereof, have always been a core foreign policy tool, short of military force, imposed by States or international organisations with a view to enforce international rules, react to illegality, prevent conflict, respond to emerging or current crises, express disapproval of certain acts or choices, or exert pressure towards a change in policy or activity. Although the term “economic sanctions” is not a term of art,2 they can be broadly defined as restrictive measures of commercial or financial – as contrasted with diplomatic or military – character,3 which aim to harm the economic interests of another State or of key natural or legal persons (individuals, corporations, organisations, or other entities), with a view to achieve specific foreign policy objectives. As opposed to other restrictive economic measures, which may be adopted to serve a very broad range of economic or non-economic State interests and objectives, sanctions are always coercive and targeted: they aim to impact the behaviour or alter the political decisions of a foreign State or of specific persons that influence decision- and policy-making. They have typically been utilised as a tool of international policy-making to promote democracy and human rights, to condemn or prevent military aggression, to curb terrorism and weapons proliferation, and to encourage military demobilization and post-conflict reconstruction.4 Economic sanctions against States typically include measures such as embargoes, barriers on imports and exports and restrictions in monetary transactions,5 whilst economic sanctions against natural or legal persons include asset freezes or seizures and restrictions in business transactions or access to services.

The long history of economic sanctions demonstrates that they are indeed one of the most powerful weapons in the quiver of States to implement their foreign policy objectives. However, they are also susceptible to abuse, straddling the fine line between legal means of economic coercion and illegal measures that run contrary to State obligations under international law. Despite the important place that economic sanctions occupy within the “system” of international law6 as a means to invoke and implement State responsibility, this fine line is not clearly defined, especially with respect to sanctions that target the economy of foreign States. There is still significant confusion as to the law governing their legality in the current international legal landscape. The present article focuses on the legality of unilateral economic sanctions under instruments that regulate States’ economic relations and on the role that international adjudicative bodies can play in drawing a line between legal and illegal economic sanctions.

To briefly outline the legal framework governing the legality of economic sanctions, economic sanctions can be adopted through the United Nations (UN) or unilaterally. In the context of the UN, economic sanctions are the primary tool at the disposal of the organisation for the purpose of maintaining or restoring international peace and security. Under Articles 39 and 41 UN Charter,7 the UN Security Council has the power to mandate UN member States to interrupt, completely or partially, their economic relations with certain States in order to induce compliance by the latter with its decisions under Chapter VII. These provisions of the UN Charter provide the legal basis for the adoption of Security Council-mandated collective sanctions by all UN member States. Moreover, Article 103 UN Charter further establishes that, in the event of a conflict between the obligations of UN members under the Charter and their obligations under any other international agreement, such as economic cooperation agreements, their obligations under the Charter shall prevail. Several international economic agreements also include exceptions stipulating that “nothing in [the] Agreement shall be construed … to prevent any Party from taking action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.”8 In view of this, the legal basis for the imposition of UN-mandated economic measures, even if they are prima facie inconsistent with a State’s international obligations in the field of economic relations, is, more often than not, uncontroversial.9

States can also adopt economic sanctions unilaterally, i.e., without the involvement of the UN Security Council, either individually or jointly with other States. These unilateral sanctions can be lawful (yet unfriendly) acts of retorsion, such as the withdrawal of voluntary development assistance or financial benefits.10 In such cases, the imposing State does not act in contravention of any existing international obligation as the target State was never legally entitled to specific treatment. However, to the extent that an economic sanction is, prima facie, inconsistent with a State’s international obligations in the field of economic relations, it must be justified on the basis of an applicable defence, or it will result in international responsibility.11 Under general international law,12 unilateral sanctions consisting in the non-performance of international obligations, can be justified under the defences codified in Part I, Chapter V of the Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA), known as “circumstances precluding wrongfulness”.13 Amongst them, the most pertinent are the defences of self-defence, necessity and countermeasures, depending on the specific circumstances under which States decide to impose the sanctions.14 However, specific treaty provisions, such as “security” or “general” exception clauses in bilateral or multilateral economic cooperation treaties,15 may also be used to justify economic sanctions that are prima facie incompatible with the substantive provisions of the same treaty.

This legal framework that governs, in principle, the legality of economic sanctions consisting in the non-performance of international commitments in the field of economic relations, is far from well-defined. The range of measures that can be justified under each defence, whether under general international law or under treaty exceptions, is not clearly demarcated. Moreover, the relationship between the defences under general international law and the relevant treaty provisions remains underexplored, resulting in uncertainty on the availability of defences to justify economic sanctions in the context of different treaty regimes.16 It is unclear whether and to what extent the defences under general international law are still available to the Respondent in a treaty-based dispute, despite the existence of relevant exception clauses in the treaty under consideration.

A factor that contributes to this reality of legal obscurity is the paucity of relevant international case law. International courts and tribunals have rarely been called to review the legality of unilateral economic sanctions imposed on foreign States against the provisions of international instruments establishing obligations in the field of economic relations. Whilst there is a wealth of case law relating to economic sanctions against individuals, including a large body of relevant judgments by the Court of Justice of the European Union, and some recent State efforts to challenge the legality of economic sanctions on the basis of international human rights or criminal law,17 there is very little inter-State litigation on the legality of such restrictive economic measures under international law governing economic relations. Before the International Court of Justice (ICJ) there are less than a handful of cases that address, in one way or another, the legality of economic sanctions under applicable treaties, and the power of international courts and tribunals to review their scope and content. Similarly, in the case law of the WTO, there are only two recent cases that provide guidance on the requirements for assessing the legality of economic sanctions under the WTO security exceptions, and an older dispute that touched on the potential availability of the defence of countermeasures to justify the imposition of WTO-inconsistent economic sanctions. This “no-courts” approach to economic sanctions perpetuates the uncertainty regarding the legal requirements for the imposition of a lawful sanction under the international law of economic relations and the scope of applicable legal defences.

On a normative level, this “no-courts” approach also has important practical implications as it affects the balance of powers within the international community. The lack of any review mechanism together with the legal uncertainty mean that the status quo is susceptible to abuse by States that have the capacity to significantly influence the policy of foreign States by means of economic pressure. For this reason, sanctions have been far from uncontroversial as a foreign policy instrument and have often been characterised as a tool of economic imperialism.18 It is, thus, in the interest of the international community to establish clearer standards and processes of accountability for the imposition of economic sanctions, not only to ensure the sovereign equality of States but also to reinforce their legitimacy.

At the same time, the crucial role that unilateral sanctions play in the enforcement of international obligations within the decentralised system of international law must not be ignored or underestimated. The dispute between Ukraine and Russia is a very characteristic example of the importance of economic sanctions in the context of international conflicts. Several States have gradually introduced an elaborate package of sanctions, including harsh economic restrictions, against Russia in response to the invasion of Ukraine.19 These sanctions are amongst the primary tools used by States to pressure Russia to comply with international law and to weaken its ability to finance military operations. A strict “supervisory” mechanism with stringent review standards could result in an overall chilling effect on unilateral enforcement actions.

This article argues that international courts can play a crucial role in striking a balance between these two competing realities and interests. It revisits the scarce inter-State litigation before the ICJ (Section 2) and the WTO dispute settlement system (Section 3), which discussed the legality of unilateral economic sanctions under applicable treaties establishing obligations in the field of international economic relations. In the relevant cases, the Respondents attempted to justify their economic sanctions on the basis of applicable exception clauses or the defence of countermeasures under general international law. The analysis presents the findings of these two adjudicative bodies/systems and summarises what we know so far regarding the assessment of the legality of economic sanctions under international instruments that regulate States’ economic relations.

The article, then, critically evaluates the findings of the ICJ and the WTO adjudicative bodies in the relevant judgments and reports and demonstrates that there are still ambiguities regarding the possibility and extent of judicial review of sanctions adopted under these legal bases (Section 4.1), as well as on the substantive test to be applied to assess their legality (Section 4.2). It pinpoints the grey areas in the law applicable to economic sanctions, on which further clarification is deemed necessary. To this end, the article argues that international adjudication can play a crucial role in such process of clarification. More litigation in this area of international law could assist in the elucidation of the relevant legal regime through interpretation of the relevant legal instruments and through an analysis of the relevant State practice and opinio juris for the purposes of delimiting the scope and content of applicable rules of customary international law. It could also prompt State reactions, which in turn can further assist in the development of the relevant law. Arguably, once the “rule-ness”20 of the relevant legal regime is firmly established, the need for court review and “supervision” will decrease, thus making it possible to envisage a fair system of international law enforcement without international courts.

2 Economic Sanctions before the International Court of Justice

As affirmed by the ICJ in the case of Nicaragua, States have no general obligation to maintain any economic relations with other States under general international law.21 Moreover, there is no general “right to be free from economic coercion”: States are not prohibited under general international law to exert pressure on other States through the imposition of unfavourable economic measures.22 Nonetheless, States, more often than not, assume specific treaty commitments relating to trade and investment. Economic sanctions may be, at least prima facie, inconsistent with such treaty commitments. It is most likely for a dispute before an international adjudicative body to arise in the context of such treaty commitments. If the treaty includes a compromissory clause,23 bestowing on a court jurisdiction to rule on disputes arising out of the “interpretation or application” of the treaty in which they appear,24 the selected international court or tribunal will be able to review the legality of the economic restrictions to the extent that they relate to provisions of the treaty in question.

Before the ICJ, treaty-based disputes relating to economic sanctions have been brought under the compromissory clauses of two bilateral treaties: Article XXIV of the 1956 Nicaragua-US FCN25 and Article XXI(2) of the 1955 Iran-US Treaty of Amity.26 Both of these treaties include identical exception clauses, the relevant parts of which read as follows: “The present Treaty shall not preclude the application of measures: … d. necessary to fulfill the obligations of a Party for the maintenance or restoration of international peace and security, or necessary to protect its essential security interests.”27 It is under the terms of this clause that the Respondent in those cases, the United States of America (US), attempted to justify its economic sanctions imposed against the Applicants.28 In addition to these cases, the Court has discussed the possibility and extent of judicial review of economic sanctions by international dispute settlement bodies in the context of appeal proceedings on the jurisdiction of the ICAO Council29 under the Chicago Convention and IASTA.30 In these cases, the legal basis invoked by the Respondents, Saudi Arabia, Bahrain, Egypt and the United Arab Emirates (known as “the Quartet”) to justify the imposed sanctions is the defence of countermeasures under general international law.

This section provides an overview of the relevant case law and discusses the findings of the Court on the possibility and extent of judicial review of economic sanctions, as well as the test to be applied in assessing the legality of economic sanctions under treaty security exceptions and the customary law on countermeasures, which were the defences invoked in the cases at hand.

2.1 Economic Sanctions Justified under Applicable Security Exceptions: The Court’s Response to Preliminary Objections

The first ICJ judgment that discussed the normative function and scope of application of exception clauses in relation to economic sanctions was in the case of Nicaragua. Nicaragua, in this seminal case for international law, complained not only of illegal military and paramilitary activities but also of certain measures of an economic nature taken against it by the US. The US had gradually imposed several restrictive measures that impacted on Nicaragua’s economy, which utterly evolved in 1985 into a total trade embargo, prohibiting all imports from and exports to Nicaragua, barring Nicaraguan vessels from US ports and excluding Nicaraguan aircraft from air transportation to and from the US.31 These measures, according to Nicaragua, were incompatible with the object and purpose of the 1956 FCN and with the terms of Article XIX FCN on freedom of commerce and navigation.32 The President of the US asserted that the Nicaraguan government’s “aggressive activities” in Central America “constitute[d] an unusual and extraordinary threat to the national security and foreign policy of the United States” which justifie[d] the declaration of a “national emergency”.33 It is on the basis of this emergency that the US sought to justify its trade embargo, using as a legal basis, with respect to Nicaragua’s treaty-based claims under the 1956 FCN, the treaty’s security exception under Article XXI.34

In examining the US arguments, the Court discussed for the first time the normative function of such exception clauses. The US argued briefly in its counter-memorial on questions of jurisdiction and admissibility that Article XXI 1956 FCN excluded from the treaty’s coverage measures that are adopted thereunder.35 In response to these arguments, the Court confirmed for the first time that clauses like Article XXI 1956 FCN, which provide “exceptions to the generality of [the] other [treaty] provisions”,36 cannot be interpreted as removing the dispute from the scope of the Treaty and thus, from the scope of the Court’s jurisdiction. According to the Court “[b]eing itself an article of the Treaty” it is well covered by the treaty’s compromissory clause.37 Thus, such clauses cannot be invoked as a preliminary objection to the Court’s jurisdiction; they may only afford States a defence on the merits of the dispute.38 The Court further confirmed that it had the power to assess what the concept of “essential security interests” entails and whether the measures in question fall within the scope of the exception clause. These issues are not “purely a question for the subjective judgment of the party” but can rather be objectively determined based on the facts of the case.39

The matter of the Court’s jurisdiction to examine economic sanctions based on the provisions of a bilateral economic cooperation agreement emerged again in the cases of Alleged Violations and Certain Iranian Assets, which are currently still pending before the ICJ. Iran initiated proceedings challenging aspects of US economic sanctions imposed against it, based on the compromissory clause of the 1955 Treaty of Amity. The compromissory clause of this bilateral treaty has been used several times by both States to initiate dispute settlement proceedings before the Court. However, these two disputes are the last ones to arise under the provisions of that treaty. In view of the Court’s decision to order provisional measures in the context of Alleged Violations, the Trump administration announced in 2018 their decision to terminate the almost 70-year-old agreement.40

To briefly outline the background to these disputes, starting in 2006, UN Security Council-mandated and unilateral economic sanctions were imposed upon Iran to induce compliance with the latter’s obligations under the Non- Proliferation Treaty (NPT). In 2015, several States, including the US, negotiated and adopted a long-term Joint Comprehensive Plan of Action (JCPOA) with Iran aiming to ensure that the latter’s nuclear programme is used exclusively for peaceful purposes. The plan envisaged the lifting of all sanctions relating to Iran’s nuclear programme,41 and all participating States, including the US, complied with this agreement. In May 2018, the Trump administration announced the end of the US participation in the JCPOA and directed the reimposition of economic sanctions against Iran. These sanctions included restrictions in financial transactions, trade in metals, the importation of Iranian-origin carpets and foodstuffs, the export of commercial passenger aircraft and related parts, trade in petroleum products, transfer of goods or technologies “likely to be used to commit human rights abuses and censorship” and others.42 The US government asserted that it was in the “national interest” of the US to reimpose such sanctions because Iran was allegedly involved in military activities in Syria, Iraq, Yemen, Lebanon and Gaza, had publicly declared that it would deny the International Atomic Energy Agency (IAEA) access to military sites contrary to the NPT and the JCPOA, and had twice violated the JCPOA’s heavy-water stockpile limits.43 It is the reimposition of these sanctions that Iran challenges in the Alleged Violations dispute on the basis that they violate Article IV Treaty of Amity on the obligation to accord fair and equitable treatment, Article VII Treaty of Amity prohibiting, in principle, the imposition of restrictions on payments, remittances, and transfers of funds, Articles VIII and IX Treaty of Amity on the obligation to accord most-favoured-nation and national treatment and the general Article X Treaty of Amity on freedom of commerce and navigation.44

Further to the restrictive measures relating to Iran’s nuclear activities, the US has also imposed restrictions on Iran by designating it in 1984 as a “State sponsor of terrorism”.45 This designation, which has been maintained ever since, entails the removal of Iran’s immunity from suit before the US courts in certain types of cases and allows for Iranian assets that have been blocked by the US to be subject to execution for the satisfaction of related judgments.46 In Certain Iranian Assets, Iran challenges these US measures, which according to Iran “have had a serious adverse impact on the ability of Iran and of certain Iranian companies to exercise their rights to control and enjoy their property”,47 as incompatible with various provisions of the 1955 Treaty of Amity, including Article III on the recognition of juridical status and access to courts, Article IV on fair and equitable treatment and most constant protection and security, Article V on certain economic transactions, Article VII on restriction to payments, remittances and transfer of funds, and Article X on freedom of commerce and navigation.

In the case of Alleged Violations, the US, in response to the Iranian claims under the 1955 Treaty of Amity contended, first, that “the true subject matter of [the] case is a dispute as to the application of the JCPOA, an instrument entirely distinct from the Treaty of Amity, with no relationship thereto”.48 Accordingly, the subject-matter of the dispute is not “the interpretation or application” of the 1955 Treaty of Amity, which forms the basis of the Court’s jurisdiction. The Court, responding to this argument, proclaimed that the Court itself shall determine, on an objective basis, the subject-matter of a dispute of which it is seised.49 However, it must take into account the parties’ submissions and give particular attention to the formulation of the dispute chosen by the Applicant.50 Although it has the power (and duty) “to isolate the real issue in the case and to identify the object of the claim”,51 it is not permitted “to modify the object of the [Applicant’s] submissions, especially when they have been clearly and precisely formulated”.52 Nor is it permitted to infer the subject-matter of the dispute from the political context of the proceedings, disregarding the precise claim of the Applicant.53 In view of this, the Court acknowledged that the dispute before it arose in a particular political context, that of the US decision to withdraw from the JCPOA, and that the politically charged environment in which disputes between States often arise, implies the possible simultaneous existence of various issues, both legal and political, that arise out of the same factual situation. However, as was already made clear in the 1980 Tehran Hostages judgment,54 regardless of the political context or the political aspects of a dispute, as long as there are legal questions that arise out of the instrument that forms the basis of its jurisdiction, the Court shall proceed to rule on these questions.55 This is the case even if the acts in question relate to the “interpretation or application” of more than one instrument. The Court is not precluded from making findings with respect to the legal questions that arise out of the treaty at hand. Similarly, possible political implications of the final judgment would not preclude the Court from hearing a case either.56 Thus, the Court need only examine if the very subject-matter of the Applicant’s claims is unrelated to the treaty invoked as a basis of the Court’s jurisdiction. Accordingly, the Court found in this case that the subject-matter of the dispute at hand is indeed alleged breaches of the 1955 Treaty of Amity by the US and that this becomes objectively apparent through the submissions and requests of the Applicant. Thus, it rejected this first preliminary objection of the US.57

Secondly, the US, in both Alleged Violations and Certain Iranian Assets, presented preliminary objections based on Article XX(1)(b), (c) and (d), the exception clause included in the 1955 Treaty of Amity. This provision, which is identical to Article XXI 1956 FCN Treaty, discussed above, provides that the treaty does not preclude the application of measures “relating to fissionable materials”, “regulating the production of or traffic in arms, ammunition and implements of war, or traffic in other materials carried on directly or indirectly for the purpose of supplying a military establishment”, or that are “necessary … to protect [a State’s] essential security interests”. Conscious of the Court’s previous judgment on this matter in Nicaragua,58 the US, in the preliminary objections stages of Certain Iranian Assets and Alleged Violations, modified slightly the arguments that it had previously advanced in Nicaragua and Oil Platforms. In the case of Certain Iranian Assets, the US argued that “the Court’s jurisdiction is limited to deciding, as an initial matter, whether the exclusions [in Article XX 1955 Treaty of Amity] apply to the challenged measure” and that such initial decision is exclusively preliminary.59 In a similar fashion, in Alleged Violations, the US argued that its measures fall so clearly within the ambit of Article XX Treaty of Amity that the Court should not proceed to hear any other arguments on the merits and should dismiss the case already at the stage of preliminary objections.60 According to the US, a determination on this matter can be made on the basis of the facts already before the Court, without deciding on the merits of the case and without prejudging Iran’s claims. It argued that its security considerations are “severable from the merits of Iran’s claims” and that in the “interests of fairness, procedural economy, and the sound administration of justice” the Court should render an early decision on these questions.61 The arguments of the US allude to the idea that treaty exception clauses constitute carve-outs whose applicability must be determined as a threshold issue before the Court proceeds to the merits of the dispute. This understanding of the clauses’ function acknowledges that their invocation does not affect the Court’s jurisdiction but supports the idea that measures falling within the scope of the relevant provisions are excluded from the scope of the Treaty which is thus rendered inapplicable. In other words, the Court’s jurisdiction extends only to a preliminary, purely factual finding that the actions in question fall within the ambit of the “carve-out”.

The Court in both cases stayed faithful to its prior approach, reaffirming that the potential applicability of a treaty’s exception clauses does not constitute a preliminary or threshold matter but should rather be examined as a defence on the merits of the dispute.62 The Court pointed out that the terms in the different subparagraphs of Article XX Treaty of Amity, such as “measures … relating to fissionable materials, the radio-active by-products thereof, or the sources thereof” require further interpretation, as the two parties already disagree as to the nature of measures that may be justified thereunder.63 Similarly, the term “measures … necessary to protect its essential security interests” calls for substantial analysis of the facts and legal arguments of the parties to the dispute, as it raises “the question of the existence of such essential security interests and may require an assessment of the reasonableness and necessity of the measures in so far as they affect the obligations under the Treaty of Amity”.64 Such an interpretation of the clause and assessment of the facts can be conducted only at the stage of the examination of the merits, according to the Court.65

In short, the existing case law on economic sanctions, which States purport to justify under applicable exception clauses, such as the ones in Articles XXI 1956 FCN and Article XX 1955 Treaty of Amity, suggests that international adjudicative bodies have jurisdiction to review, in principle, their legality under the terms of such clauses. Exception clauses can only be invoked as defences on the merits of the dispute and not as preliminary objections or as threshold issues affecting the Court’s power to examine the consistency of the challenged measures with the terms of the treaty under consideration. These judgments clearly dispel any arguments that such exception clauses provide an unlimited right for States to take restrictive economic measures under specific circumstances, and that they have the right to unilaterally self-judge whether such circumstances exist. This argument has also sparked heated debate in the context of the WTO Agreements, as discussed in the following section. Nonetheless, the extent to which the Court can indeed review the content and scope of the relevant economic measures is also dependent on the interpretation of the terms of the applicable exception clauses, as a very broad interpretation can de facto amount to an unlimited right to invoke such exceptions. The following section provides an overview of what we know so far from the existing ICJ case law regarding the interpretation of the substantive legal requirements for successful invocation of such security exception clauses.

2.2 ICJ Findings on the Substantive Legal Requirements for Successful Invocation of Security Exceptions and the Standard of Judicial Review

Turning to the substantive requirements of security exception clauses, ICJ case law provides very little guidance on the legal test for assessing the legality of economic sanctions on the basis of such applicable exceptions.

Regarding the notion of “essential security interests” and what it entails, the Court in Nicaragua simply confirmed, presumably through a grammatical interpretation, that self-defence against an armed attack certainly “corresponds to measures necessary to protect essential security interests, but the concept of essential security interests … extends beyond the concept of an armed attack, and has been subject to very broad interpretations in the past.”66 It did not provide any further guidance as to the range of circumstances that could fall within the scope of this term or the tools of interpretation used to reach these conclusions.

As to the rest of the substantive requirements for successful invocation of the security exception clause, the Court has stipulated that it must assess “whether the risk run by the [identified] ‘essential security interests’ is reasonable”.67 The relevant judgments do not explain further what the term “reasonable” means in this context, or on the basis of what criteria the Court will assess such reasonableness. The analysis implies that the Court must assess whether the risk involved is genuine and serious enough to give rise to a need for immediate response. In this context, the chronological sequence of events must also be considered. The measures in question must be “necessary” at the time that they were taken.68 This is an evidence-based examination that is conducted on a case-by-case basis. In the case of Nicaragua, for example, the Court found that there was “no evidence at all … to show how Nicaraguan policies had in fact become a threat to ‘essential security interests’” in May 1985, given that those policies had been consistent, and consistently criticized by the United States, for four years previously.69 The Court was thus “unable to find that the embargo was ‘necessary’ to protect [the alleged essential security] interests.”70 This finding further implies that “urgency” is a criterion for assessing the necessity of a measure: if the alleged risk has been present for a long time but no action has been deemed necessary previously, the Respondent must demonstrate why the exceptional measure has become necessary at the time that it was adopted.

Moreover, as the Court explained in Nicaragua and repeated in subsequent judgments,71 “the measures presented as being designed to protect these interests are not merely useful” or do not “merely … tend to protect the … interests [at stake]” but are rather “necessary” for that purpose.72 This seems to suggest that a mere correlation between a measure and a potential risk to a State’s security interest does not suffice for the measure to be justified under the security exception. The term “designed” also suggests that the measure must be a calculated reaction for the purpose of dealing with the specific risk that was identified. This assessment, according to the Court, does not rely on the subjective judgment of the party;73 rather it must be assessed, again, on the basis of available evidence regarding the nature of the “threat” to the State’s essential security interests.

2.3 Sanctions in Response to Prior Illegal Acts: Jurisdiction to Examine Indispensable Incidental Issues in the Context of an Applicable Defence

Economic sanctions in response to prior illegal acts of the targeted State can also be justified under general international law based on the customary defence of countermeasures. When the Respondent asserts that the legal basis for the adoption of its restrictive measures is the defence of countermeasures, there is an important jurisdictional consideration that may hamper the targeted State in initiating proceedings before an international court. The defence of countermeasures is only available as a response to a prior internationally wrongful act. Such prior act will very likely fall outside the jurisdictional boundaries of the Court. This is especially so when the dispute is submitted to the Court on the basis of a compromissory clause, as is most often the case in international economic law. The alleged prior internationally wrongful act, for example a human rights violation or an act of aggression, will likely not fall within the ambit of disputes arising out of the “interpretation or application” of the treaty that formed the basis of the Court’s jurisdiction, for example, a bilateral agreement on trade facilitation or economic cooperation. But similar issues may also arise in disputes submitted to the Court on the basis of optional clause declarations: the declarations may include reservations that exclude from their scope certain types of disputes, and the prior acts in this context may be amongst the disputes that are thereby excluded.

The Court has dealt with this issue in the two (almost identical) 2020 judgments relating to the Jurisdiction of the ICAO Council.74 In this dispute, the “Quartet” of applicants – Saudi Arabia, Bahrain, United Arab Emirates and Egypt – challenged the decision of the ICAO Council to uphold its jurisdiction over Qatar’s claims relating to the Quartet’s aviation restrictions against Qatar-registered aircraft. These restrictions formed part of a comprehensive set of measures adopted in June 2017 by the four applicants in the context of their air, land and sea blockade imposed on 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.75 The Quartet also accused Qatar of meddling in their internal affairs. The above actions, according to the Quartet, were in violation of the so-called Riyadh Agreements, a series of agreements concluded in 2013 and 2014 within the Gulf Cooperation Council which aimed to ensure stability in the region and to restore the already shaken relations among the Council members.76 Qatar has repeatedly denied these allegations and challenged several different aspects of these measures before different fora,77 including the ICAO Council and the WTO dispute settlement system.

The Quartet argued before the ICJ in this case that the “ICAO Council lacked jurisdiction under the Chicago Convention [or IASTA] since the real issue in dispute between the Parties involved matters extending beyond the scope of that instrument, including whether the aviation restrictions could be characterized as lawful countermeasures under international law”.78 The Council rejected this preliminary objection. The Respondents then instituted an appeal from the Council’s decision on jurisdiction before the ICJ under Article 84 of the Chicago Convention and Article II, Section 2, of IASTA.

The ICJ, in its judgment, found that the ICAO Council did not err in rejecting the Quartet’s assertion and dismissed the Applicant’s grounds of appeal. In its judgment, 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”.79 This finding echoes its previous judgment in the 1972 ICAO Council case, where the same conclusion was reached with respect to defences under the general international law of treaties.80 The invocation of a defence cannot remove a dispute from the Court’s jurisdiction.

Secondly, and most importantly, the Court found 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 IASTA] solely in order to settle a disagreement relating to the interpretation or application of the Chicago Convention would not render the application submitting that disagreement to it inadmissible.”81 In other words, the ICJ confirmed that the ICAO Council could exercise jurisdiction over indispensable incidental matters in the context of the defence of countermeasures in order to discharge its function under the Chicago Convention or IASTA. 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 the ICJ itself and other international adjudicative bodies.82

The findings of the Court confirm that a defence on the merits cannot preclude an international court or tribunal from hearing a case and that arguments presented in the form of “replies” to the claims of the Applicant are within the Court’s subject-matter jurisdiction. This, according to the ruling in the 2020 ICAO Council case, entails the power to rule on any indispensable incidental matter, even if such matter would be outside the Court’s jurisdiction if it was presented as an independent claim. This finding is of paramount importance for the challenge of economic sanctions before an international judicial forum when the Respondent attempts to justify its measures on the basis of the general international law on countermeasures rather than a treaty provision. As discussed in the following section, the WTO adjudicative bodies have taken a different approach to this issue, which raises an important jurisdictional obstacle in challenging economic sanctions on the basis of the WTO Agreements.

3 Economic Sanctions before the WTO Adjudicative Bodies

Today, a large percentage of States’ trade obligations are enshrined in the WTO Agreements. Thus, the legality of trade restrictive economic sanctions should be assessed, primarily, under WTO law. The general and security exceptions in the WTO Agreements (Articles XXXXI GATT, XIVXIV bis GATS and 73 TRIPS83) allow certain trade restrictions that would otherwise be inconsistent with a State’s WTO obligations. Especially the security exceptions, as evidenced also by the negotiating history of the GATT, were considered as “an overriding authorisation for sanctions”.84 However, the scope of these clauses is limited and does not cover, at least on first reading, many circumstances under which economic sanctions are imposed against foreign States, such as sanctions imposed in response to human rights or humanitarian law violations. The EU, which has one of the most sophisticated restrictive measures regimes internationally, in its “Sanctions Guidelines” explains on this matter that “restrictive measures should … respect the international obligations of the Union and its Member States, in particular the WTO Agreements. The … GATT and the … GATS apply when restrictive measures affect trade in goods or services with third countries. Article XXI of GATT allows for [certain] import and export restrictions … Article XIV bis of GATS provides for a similar exception. Measures restricting trade which do not fall under these categories have to meet the conditions laid down in Article XX of GATT and Article XIV of GATS, respectively, and, in some cases, could be incompatible with WTO rules.”85 Thus, we see an explicit acknowledgement of the limitations of the WTO exception clauses, which cannot justify all economic sanctions that may be challenged before the WTO dispute settlement system. Nonetheless, the defence of countermeasures under general international law may be residually applicable to the WTO regime and can potentially justify certain sanctions that do not fall within the scope of the security exceptions.

This section provides an overview of the case law of the WTO adjudicative bodies that relates to the WTO security exceptions and the defence of countermeasures under general international law. It is striking that, despite the evident tension between trade sanctions and the WTO trade liberalisation commitments, the relevant case law is extremely scarce. In fact, there are only two, relatively recent, WTO Panel reports which discuss the scope of the WTO security exceptions in relation to economic sanctions and two reports (a Panel report and, later, an Appellate Body report on the same dispute) that discuss the potential relevance of the defence of countermeasures to the WTO regime. This section outlines the findings in the relevant reports and discusses the approach of the WTO adjudicative bodies to the substantive requirements for assessing the legality of trade-related sanctions and to the limits of their subject-matter jurisdiction.

3.1 The WTO Security Exceptions: Substantive Requirements and Standard of Review

The WTO security exceptions allow members to justify trade-restrictive measures on non-trade grounds.86 In terms of wording, they have prima facie similarities with Article XXI 1956 FCN and Article XX 1955 Treaty of Amity discussed above. However, there is an important textual difference: unlike the clauses discussed in ICJ jurisprudence, the WTO security exceptions do not provide for the adoption of measures “necessary” for the protection of essential security interests, but rather for measures that a member “considers necessary” for such purpose.87

This drafting peculiarity has, for a long time, sparked controversy regarding the scope of the security exceptions and the possibility and extent of judicial review. One of the main arguments, which was extensively discussed in academic literature before the seminal report in Russia – Transit,88 was that the term “it considers” indicates the clause’s “self-judging” character. There were several variations to this argument. Whereas some argued that States have carte blanche in deciding when and what measures protect “essential security interests”, whether they relate to one of the objectives enumerated in the relevant provisions and whether they are necessary for the exigencies of the situation, without any constraints,89 others argued that only some of the elements of the test are self-judging, such as the necessity test, while the rest are capable of objective determination.90 Even the ICJ in its analysis in Nicaragua had suggested that the term “it considers” in Article XXI GATT implied the provision’s self-judging character, making an argument a contrario with respect to the scope of the similar clause in the 1956 FCN, which did not include this term.91 According to the interpretation that sided in favour of an entirely self-judging exception, the invocation of security exceptions would afford a direct jurisdictional defence to the Respondent.92 In the GATT 1947 era, this would mean that a panel should not be established at all as it would have no authority to rule on the matter.93 In the WTO era, where panels are established in a virtually automatic manner, this argument would constitute a preliminary objection to the panel’s subject-matter jurisdiction or to the admissibility of the dispute.94

Against this background, the WTO Panel in the Russia – Transit dispute was called to determine for the first time95 the scope and content of the WTO national security exceptions. About a year later, the Panel in Saudi Arabia – IPR96 issued the second report on the issue, which largely followed the analysis in Russia – Transit, thereby confirming that the much-anticipated report in Russia – Transit has set the trend in the examination of the WTO security exceptions and the review of trade-related economic sanctions under WTO law.

3.1.1 The Russia – Transit Report: The First Comprehensive Analysis on Assessing the Legality of Trade-related Sanctions under WTO Law

In the 2016 Russia – Transit dispute, Ukraine initiated WTO proceedings against Russia concerning multiple restrictions on traffic in transit by road and rail from the territory of Ukraine through the territory of Russia to third countries. Ukraine argued that Russia’s measures were inconsistent with its obligations under Article V GATT on freedom of transit, Article X GATT on the publication and administration of trade regulations, and related commitments in Russia’s Accession Protocol.97 Russia, invoking the security exception in Article XXI(b)(iii) GATT, argued that the challenged measures were taken for the protection of its essential security interests in view of the emergency in its international relations with Ukraine.98 This trade dispute formed part of the wider situation of tension between the two States, which first escalated following a change in Ukraine’s government in 2014. The new government, which was sworn in in the wake of the Euromaidan events and the 2014 Ukrainian revolution, sought to create closer ties with the EU rather than strengthen the close relationship of the country with Russia. This shift in policy created tensions in certain regions of the country, which escalated into the occupation and annexation of part of Ukrainian territory, i.e. the Autonomous Republic of Crimea and the city of Sevastopol, by Russia. The events were followed by the imposition of restrictive diplomatic and economic measures against Russia by a number of countries.99 Although Russia did not explicitly characterise its measures as economic sanctions against Ukraine, the factual background to the dispute, clearly suggests that Russia’s trade-restrictive measures challenged in this dispute were taken as a response to Ukrainian policies and aimed at putting pressure on the Ukrainian government to revisit its political decisions.100 Moreover, the Court’s analysis on the WTO security exceptions, which was the first in the WTO era, informs our understanding of the test for assessing the legality of trade restrictive measures imposed for non-trade purposes under the WTO Agreements.

First and foremost, the Panel confirmed that the provision cannot be interpreted as entirely self-judging.101 Panels have the power to review whether the requirements of the security exceptions are met and thus, their invocation does not remove the dispute from the panel’s jurisdiction. This is consistent with the findings of the ICJ, discussed above, even though the ICJ itself has distinguished the treaty clauses before it from the WTO security exceptions.102 Together with the argument on the alleged self-judging character of the security exceptions, the Panel also rejected the alleged non-justiciability of relevant disputes.103 By reference to previous findings of the WTO Appellate Body, as well as those of the ICJ, it confirmed that, to the extent that there is “a legal question capable of a legal answer, it is duty-bound to take jurisdiction over it, regardless of the political background or the other political facets of the issue.”104

Regarding the requirements for successful invocation and the extent/standard of judicial review, the Panel, interpreting Article XXI GATT, confirmed that the enumerated sub-categories are capable of objective determination and have a limitative function.105 It would thus be contrary to the principle of effective interpretation to leave their determination exclusively at the discretion of the invoking State.106 This conclusion is further supported by the object and purpose of the WTO Agreements which is, among others, “to promote the security and predictability of the reciprocal and mutually advantageous arrangements […]” enshrined in the treaties.107 The Panel made also extensive reference to the negotiating history of the clause.108 It concluded that members were meant to have “some latitude” to determine what their essential security interests are and the necessity of an action to protect them, while potential abuse of the exceptions would be curtailed by limiting the circumstances in which the exceptions could be invoked to those specified in the subparagraphs of Article XXI(b).109

The Panel then elaborated on the criteria for an action to objectively fall within the scope of the subparagraphs. With respect to Article XXI(b)(iii), it confirmed that what constitutes “war or other emergency in international relations”, is “clearly capable of objective determination”.110 The term “war” refers to an armed conflict, whether international or non-international.111 Whilst the term “emergency” is less clear, the Panel offered a dictionary definition, that is, a “situation, especially of danger or conflict, that arises unexpectedly and requires urgent action”, and a “pressing need … a condition or danger or disaster throughout a region”.112 Regarding the meaning of “emergency in international relations”, according to the Panel, the use of the conjunction “or” with the adjective “other” in “war or other emergency in international relations” clearly indicates that war is one example of the larger category of “emergency in international relations”.113 In this light, such an emergency would not be simply a political or economic difference between States, even if urgent. Only “a situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state” which would “give rise to defence and military interests, or maintenance of law and public order interests” would qualify for the exception.114 Moreover, the term “in time of” requires that the measures in question are taken during the invoked emergency.115

The Panel then examined whether Russia’s arguments fall indeed within the scope of this exception. Russia presented no hard evidence in support of its claims arguing that such information was sensitive and that the events surrounding its emergency are known to the public and to Ukraine.116 The Panel therefore discussed the hypothetical circumstances that Russia presented as similar to those on the ground: unrest within the territory of a neighbouring country in the immediate vicinity of the border; loss of control by that neighbouring country over its border; movement of refugees; and unilateral sanctions imposed by that neighbouring country or by other countries, not authorized by the UN.117

The Panel found the information submitted by Russia sufficiently clear to identify the situation.118 According to the Panel, Russia has identified the time-period in which the emergency arose and continues to exist, shown that the situation involves Ukraine and that it affects the security of Russia’s border with Ukraine in various ways. The Panel further concluded that there is sufficient evidence before it that, during the crucial time for the dispute, relations between Ukraine and Russia had deteriorated to such a degree that they were a matter of concern to the international community, that the situation was recognised by the UN General Assembly as involving armed conflict, and that the gravity of the situation was such that a number of countries have imposed sanctions against Russia.119

In view of the above, the Panel concluded that the situation constitutes an emergency within the meaning of Article XXI(b)(iii) GATT.120 The fact that Russia had significant involvement in the creation of such emergency did not affect the Panel’s findings. In fact, the Panel expressly stipulated that “it is not relevant to this determination which actor or actors bear international responsibility for the existence of this situation to which Russia refers. Nor is it necessary … to characterize the situation between Russia and Ukraine under international law in general.”121

Lastly, the Panel found that the term “which it considers” refers to the measure’s “necessity” which is, thus, at the sole discretion of the invoking State. Accordingly, the Panel did not examine the necessity of Russia’s measures.122 It discussed, however, whether the measures were indeed related to “essential security interests.” It found that “essential security interests” refer generally to “those interests relating to the quintessential functions of the State, namely, the protection of its territory and its population from external threats, and the maintenance of law and public order internally”.123 Nonetheless, such interests are expected to vary from State to State and with changing circumstances and thus, it is left, in general, to the discretion of every member to define what it considers as essential security interests.124 According to the Panel, the invoking State should “articulate the essential security interests said to arise from the emergency in international relations sufficiently enough to demonstrate their veracity”.125 This articulation should be “minimally satisfactory” in the circumstances.126

However, the State is not free to elevate any concern into an “essential security interest”. The Panel suggested that the discretion of a member is limited by the principle of good faith, which requires an examination of whether a member is re-labelling trade interests as “essential security interests”.127 In other words, by reference to good faith, the Panel introduced to the security exceptions considerations similar to those in the chapeau of Article XX GATT. But the standard that it set for a State to meet this good faith requirement is significantly lower than that required under Article XX, as crystallised in the relevant GATT and WTO jurisprudence. The Panel suggested that the measures at issue should meet a “minimum requirement of plausibility”: they must be “not implausible as measures protective of [the proffered] interests”.128 This is similar to the threshold for provisional justification under Article XX, where the measure should be “not incapable of” addressing the interest invoked.129 However, in the context of Article XX this criterion is part of a broader examination of the measure’s “design”, which aims to ascertain the existence of a relationship between the measure and the stated objective. And, of course, there are two further steps of analysis following a measure’s provisional justification (required nexus and chapeau), which ensure that the threshold to justify a measure under Article XX is, all things considered, relatively high. In the case of Article XXI, the “not implausible” criterion seems to be the sole requirement of connection between the measure and the stated objective.

In light of the test above, the Panel found that “despite its allusiveness” Russia’s articulation of its essential security interests met the applicable standard as “there [was] nothing in Russia’s expression of those interests to suggest that Russia invokes Article XXI(b)(iii) simply as a means to circumvent its obligations under the GATT”.130 The measures at issue cannot be regarded as “so remote from, or unrelated to, the 2014 emergency, that it would be implausible that Russia implemented them for the protection of its essential security interests arising out of that emergency.”131 The Panel reached this conclusion despite having acknowledged the evidence presented by Ukraine demonstrating that Russia’s measures were direct or immediate responses to the entry into force of the EU-Ukraine Association Agreement, the deterioration of its political relations with Ukraine and the sanctions imposed against it by several countries.132 These facts, according to the Panel’s report, were not sufficient indications to rebut the plausibility of Russia’s case.

3.1.2 The Saudi Arabia – IPR Report: Confirming that the Russia – Transit Test Is the New Standard for Assessing Trade-Restrictive Sanctions

In Saudi Arabia – IPR, Qatar initiated proceedings against Saudi Arabia for alleged violations of its obligations under the TRIPS affecting the intellectual property rights of Qatari nationals. One of such nationals was beIN, a global sports and entertainment company, which has obtained the exclusive rights to broadcast, and to authorise others to broadcast, prime sporting competitions in the Middle East and North Africa region, including in Saudi Arabia. Following Saudi Arabia’s severance of relations with Qatar in 2017, access to beIN’s website in Saudi Arabia was blocked and beIN was stripped of its license to distribute media content. Around the same time a new company emerged (“beoutQ”) which began the unauthorized distribution and streaming in Saudi Arabia of media content created by or licensed to beIN. Qatar argued that Saudi Arabia stripped Qatari nationals of the ability to protect their intellectual property rights within its jurisdiction and failed to prosecute beoutQ for piracy.133 Saudi Arabia’s main submission in response to these claims was that its acts and omissions fell within the scope of the security exception in Article 73 of the TRIPS.

This case, similarly to Russia – Transit, was one of several aspects of a broader dispute, which, as discussed above,134 involved imposition of a comprehensive set of economic and other sanctions against Qatar by a group of States, led by Saudi Arabia, United Arab Emirates, Bahrain and Egypt, and the complete severance of international relations between Qatar and these States. Saudi Arabia – IPR was one of the WTO proceedings135 initiated in the context of this wider dispute. The Panel and both disputing parties characterised the severance of relations and surrounding facts as “relevant background” to the measures at issue.136

The Panel in Saudi Arabia – IPR first established a prima facie inconsistency of the Saudi measures with Articles 42, 41.1 and 61 TRIPS137 and then examined whether the measures were nonetheless justified under Article 73 TRIPS.138 It started its analysis on Article 73 TRIPS by summarising the findings in Russia – Transit and confirmed that, because of their identical wording, the TRIPS security exceptions should be interpreted in a manner analogous to the GATT.139 This also confirmed that the Panel had not intended to deviate from the test elaborated in the Russia – Transit report, which it closely followed.

First, the Panel found that there was indeed an emergency in the international relations of the two States, as defined in Russia – Transit. It agreed with Saudi Arabia that severance of all diplomatic and economic ties with another State is “the ultimate State expression of the existence of an emergency in international relations.”140 Interestingly, the Panel referred to the legal basis of the severance of diplomatic and economic ties under general international law. With respect to severance of diplomatic relations, the Panel recalled that it is “a unilateral and discretionary act usually decided upon only as a last resort when a severe crisis occurs in the relations between” a sending and a receiving State.141 The Panel further referred to Article 41 UN Charter providing for UN authorised diplomatic and economic sanctions.142 However, the Panel failed to acknowledge that unilateral retaliatory action involving the suspension of international obligations, as in the case at hand, is not simply a discretionary act of the imposing State under general international law. Unless the State is able to successfully invoke an applicable defence,143 the suspension of international obligations constitutes an internationally wrongful act and results in the international responsibility of the State.

The Panel found that the blockade of Qatar was an indication of the emergency of the situation. It further referred to the allegations of Saudi Arabia that “Qatar had, inter alia, repudiated the Riyadh Agreements …, supported terrorism and extremism, and interfered in the internal affairs of other countries.”144 Despite noting, once more, the strong denial of these accusations by Qatar and reaffirming that itself it “expresses or implies no position concerning any of these allegations”, the Panel still found that the allegations supported the Saudi claim that there was indeed an emergency.

It becomes evident that the Panel’s reasoning in establishing the existence of an emergency is, as stipulated by Qatar in its submissions, circular: Saudi Arabia’s severance of all diplomatic and economic relations constitutes both the “emergency in international relations” and the “action which [Saudi Arabia] considers necessary for the protection of its essential security interests”. The Panel said that the “action” in question was not the severance of diplomatic and economic relations in general but rather its specific aspects challenged before it.145 But this does not convincingly address the logical fallacy: the very same measures, which distorted the relations between the two States and were challenged before the Panel, were used as evidence of the existence of an emergency which would justify the taking of such measures in the first place.146

Regarding the articulation by Saudi Arabia of its essential security interests, the Panel rejected Qatar’s claims that the Saudi formulations were “vague” and “imprecise”. It recalled the “not particularly onerous” standard articulated in Russia – Transit and found that the Saudi articulation was “minimally satisfactory” to enable an assessment of whether there is any link between the relevant actions and the protection of its essential security interests.147

Lastly, the Panel examined whether the measures were taken in good faith; in other words, following the reasoning in Russia – Transit, it examined whether they were “not implausible” as measures protective of the proffered essential security interests.148 In this context, the Panel found that the measures in question, including denying Qatari nationals access to civil remedies through Saudi courts and preventing law firms from representing them (known as anti-sympathy measures149), may be viewed as aspects of Saudi Arabia’s “umbrella policy of ending or preventing any form of interaction with Qatari nationals” and thus meet the minimum requirement of plausibility.150

However, with respect to the failure of the Saudi authorities to prosecute beoutQ for piracy, the Panel reached a different conclusion. As prosecution requires no interaction with Qatari nationals, this failure cannot be linked to the invoked security interest.151 Moreover, the Panel stipulated that the failure affected “not only Qatar or Qatari nationals but also a range of third-party right holders”.152 The Panel did not justify this reference to the rights of third parties or explained whether and how this affected its findings on the legality of the measures in question, but the reference seems to imply that measures taken under the WTO security exceptions should only affect the State/States (and by extension, their nationals) involved in the security concern identified by the invoking State. This is reminiscent of the requirements for a lawful countermeasure under general international law, which can only be directed against a State or States, which are responsible for an internationally wrongful act.153 In a situation where an obligation owed to a third State is breached by the countermeasure, the wrongfulness of the measure is not precluded as against the third State.154

In view of the above, the Panel found that the requirements for invoking Article 73(b)(iii) are met in relation to the inconsistencies with Articles 42 and 41.1 TRIPS but not in relation to Article 61.155

3.1.3 Countermeasures in the WTO: Exploring the Boundaries of WTO Adjudicative Bodies’ Subject-Matter Jurisdiction

The WTO adjudicative bodies have only discussed the potential relevance of the defence of countermeasures under general international law to WTO disputes once. In the case of Mexico – Soft Drinks, the Panel and Appellate Body, in addressing Mexico’s arguments, discussed Article 49 ARSIWA and its relationship with the general exceptions in Article XX GATT. Mexico argued in that case that Article XX(d) GATT which reads “… nothing in this Agreement shall be construed to prevent the adoption or enforcement … of measures: … (d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement …”, incorporates the defence of countermeasures under general international law.156 According to Mexico, the term “laws and regulations” includes international obligations of WTO members and thus, Article XX(d) can be invoked to justify measures designed “to secure compliance” with such obligations, in that case the US obligations under NAFTA.157

The Panel and Appellate Body held that Article XX(d) refers to “enforcement action within a particular domestic legal system, and [does] not extend to international action of the type taken by Mexico”.158 Interpreting the provision in its context and in accordance with the ordinary meaning of the terms, they found that the term “laws and regulations” “refer[s] to the rules that form part of the domestic legal order of the WTO Member invoking the provision and do not include the international obligations of another WTO Member.”159 Thus, they found that Article XX(d) does not encompass action taken as a countermeasure in response to an internationally wrongful act. As Mexico’s arguments did not relate to other subparagraphs of Article XX, the Panel and Appellate Body did not elaborate further on the potential relationship between countermeasures and the rest of the provision.

However, two further arguments were raised in the Mexico – Soft Drinks reports which suggest, more generally, that the defence of countermeasures under the general law on State responsibility cannot be invoked in the context of a WTO dispute, a matter that has significant implications for the litigation of disputes regarding economic sanctions.

Firstly, the Appellate Body stressed that, if the term “laws and regulations” included international obligations then it would also include obligations under the WTO Agreements.160 Accordingly, Article XX(d) could also be used to justify measures taken in response to a member’s breach of WTO obligations. This would be contrary to Articles 22 and 23 of the Dispute Settlement Understanding (DSU) which provide for the obligation to have recourse to the DSU instead of taking unilateral action in order to seek redress for any alleged WTO breach and the possibility of WTO-mandated suspension of concessions in cases of non-compliance with a Dispute Settlement Body (DSB) ruling within a reasonable time.161

Secondly, the Panel and Appellate Body rejected the applicability of countermeasures from the viewpoint of jurisdiction. They pointed out that in order to examine whether a measure is justified as a countermeasure, panels and the Appellate Body would have to determine whether the non-WTO obligation in question (in that case, obligations under NAFTA) has been violated.162WTO panels and the Appellate Body would thus become adjudicators of non-WTO disputes”, which, according to the Appellate Body, is not their function as intended by the DSU.163 The Appellate Body recited to this end Article 3(2) DSU according to which the WTO Dispute Settlement System (DSS) “serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements”.164 Accordingly, it cannot “be used to determine rights and obligations outside the covered agreements.”165 Thus, it seems that in the only case where the issue has arisen, the Appellate Body held that responding States cannot rely on the defence of countermeasures under general international law in a WTO dispute due to jurisdictional limitations of the WTO adjudicative bodies.166 This approach is very different from that adopted by the ICJ in the 2020 ICAO Council judgment, discussed in the previous section.

4 Critical Evaluation of the Case Law: The Grey Areas in the Law of Economic Sanctions and the Way Forward

The previous sections of this article provided an overview of the limited case law before inter-State adjudicative fora that relates to the litigation of economic sanctions under applicable treaties that regulate States’ international economic relations. As it becomes readily evident, inter-State litigation on economic sanctions is very scarce. It mostly arises in situations of heightened tension between States and is used by the Applicants as a means of putting pressure on the Respondents not only to lift the sanctions but also to re-evaluate their political stance on specific issues of national importance. It is telling that the legal disputes above were all in the context of major inter-State disputes that have seen several escalations: the Iran-US dispute, the US-Nicaragua dispute, the Gulf crisis and the Qatari embargo, and the Russia-Ukraine dispute. It is fair to say, given the small number of relevant cases, that States do not generally bring such issues before inter-State judicial fora.

This section evaluates the existing case law and highlights the grey areas of the law governing the legality of economic sanctions as they emerge from the case law, which need further clarification and refinement. It argues that international courts and tribunals could play a crucial role in the process of clarifying the relevant rules if they are presented with more opportunities through the submission of relevant disputes by affected States. This can contribute towards greater legal certainty and provide more coherent and “user-friendly” guidance on what constitutes lawful economic sanction.

4.1 Jurisdictional Challenges in Litigating Economic Sanctions: Possibility and Extent of Judicial Review

Consent is the key condition for resort to any means of dispute settlement in international law.167 Thus, one of the first potential explanations that come to mind for the striking lack of relevant adjudication is the lack of a jurisdictional basis for States to challenge the legality of economic sanctions imposed upon them before international judicial fora.

In the case of the ICJ this is an important factor that may have contributed to the paucity of relevant case law. As demonstrated above, there are only a handful of cases regarding economic sanctions before the ICJ and all are based, essentially, on the same – relatively old – economic cooperation agreements that included compromissory clauses authorising parties to submit disputes arising thereunder to the ICJ. But States targeted by economic sanctions will often have no jurisdictional basis to submit the relevant dispute to the Court. Although 73 States have submitted declarations to the UN under Article 36(2) ICJ Statute,168 most of them, by and large, include several reservations that significantly reduce the range of disputes that may be submitted to the Court on that basis.169 Special agreements are usually concluded only in the context of specific territorial disputes and rarely refer to the Court other contentious matters.170 Dispute settlement treaties that provide the possibility of recourse to the ICJ are also very rare and have only been concluded on a regional level.171 Thus, the lack of a jurisdictional basis may be a factor that affects the litigation of economic sanctions before the ICJ.

However, this factor cannot explain the lack of relevant adjudication in the context of the WTO, where there is always a clear jurisdictional basis to challenge trade restrictions that are prima facie inconsistent with States’ WTO obligations. The DSU, which forms part of the WTO Agreements, sets out the rules and procedures that govern the settlement of disputes arising under the “covered agreements”.172 States that accede to the WTO automatically consent to the DSU and the jurisdiction of the WTO adjudicative bodies in a compulsory manner as the WTO Agreements constitute a “single undertaking”.173 Given the obvious tensions that arise between WTO obligations and trade-related economic sanctions, one would expect that the number of relevant disputes would be significantly higher. Thus, the reason behind the paucity of relevant litigation must be sought elsewhere.

Looking more specifically into the different legal bases that may be invoked by the Respondent to justify the imposition of economic sanctions that are prima facie inconsistent with its obligations under agreements relating to economic relations, we can identify some further jurisdictional challenges that create uncertainty and potentially influence States’ decisions to challenge, or rather, not challenge, the legality of sanctions.

As seen in the overview of the relevant case law, Respondents have raised several preliminary objections to the adjudicative bodies’ jurisdiction to review the legality of economic sanctions that are allegedly adopted under the terms of applicable security exceptions. On this matter, the ICJ – in the few cases where the opportunity has arisen – has emphatically upheld its jurisdiction to examine the legality of economic sanctions under applicable treaty exception clauses. It has rejected all preliminary objections arguing that exception clauses remove relevant disputes from the scope of its subject-matter jurisdiction and has affirmed that such clauses allow parties to “derogate from the other provisions of the treaty” but do not exclude a priori the relevant measures from the regulatory purview of the treaty.174 It becomes evident from the relevant case law that security exceptions can only function as defences on the merits of the dispute, once it becomes apparent that the conduct under consideration would otherwise be in conflict with the obligations enshrined therein.175

Moreover, the ICJ has firmly established that even when economic sanctions are adopted in the context of a complex political dispute and only one or some of its aspects can properly be presented before the Court due to jurisdictional limitations, it is still possible for the Court to rule on such aspects, isolating them from other legal issues that escape the purview of its subject-matter jurisdiction.176 As stipulated in Nicaragua, “the Court has never shied away from a case brought before it merely because it had political implications”.177 As long as there is a question of legal character, the Court must discharge its “essentially judicial task”, which is to assess the legality of the conduct of States in view of their international obligations.178 This is an important finding, as it would otherwise be virtually impossible for States to challenge the legality of economic sanctions, which are almost always imposed in the context of broader situations of tensions that involve several different legal issues over which the ICJ, more often than not, has no jurisdiction to make pronouncements.

Lastly, the ICJ has clarified that security exceptions are not “self-judging” and disputes arising thereunder are not inherently non-justiciable.179 States do not enjoy an unlimited margin of appreciation in adopting restrictive measures under such clauses. Rather, the Court has the power to review, on an objective basis, whether the measures fulfil the substantive requirements enshrined in the text of the security exceptions based on available evidence.

The two WTO panels that were called, so far, to examine the applicability of the WTO security exceptions have taken the same approach as the ICJ on whether they have the power to examine on the merits the compatibility of the adopted trade-restrictive measures with the substantive requirements enshrined in the text of the exception provisions. They have dispelled any doubts regarding the alleged “self-judging” character of the security exceptions and confirmed that their invocation is not an unreviewable trump card that can be used by States solely on the basis of their own unilateral assessment of the circumstances.180

Overall, it seems that any jurisdictional considerations that may discourage States from challenging economic sanctions that the Respondent attempts to justify on the basis of treaty security exceptions have largely been addressed by the ICJ and the WTO adjudicative bodies, opening the door for the judicial review of relevant measures. However, the relevant analysis demonstrates the importance of international adjudication in eliminating uncertainties regarding the scope and function of international legal provisions. As seen par excellence in the context of the WTO security exceptions, the lack of relevant jurisprudence leaves ample space for speculation and, as a result, for the misuse and abuse of legal exceptions. Before the Russia – Traffic and Saudi Arabia – IPR disputes, the WTO security exceptions, and the possibility of judicial review of measures adopted thereunder, was the subject of fierce academic debate which cast doubts as to the extent of the right of States to adopt trade-restrictive measures.

As for the defence of countermeasures under general international law, the core requirement that the measure is taken in response to a prior internationally wrongful act raises questions on whether the examination of the defence falls properly within the subject-matter jurisdiction of the international adjudicative body that is seised of the matter. As seen in the analysis above, the prior determination of whether such a wrongful act has taken place is often outside the scope of the subject-matter jurisdiction of the adjudicative body in question, especially since most relevant disputes are treaty-based and brought before the court on the basis of compromissory clauses. The ICJ and the WTO have so far taken different approaches to the issue of jurisdiction to examine indispensable incidental issues in the context of the defence of countermeasures. The ICJ endorses an expansive approach to the limits of the subject-matter jurisdiction of international adjudicative bodies: they have the power to make interim findings on all indispensable incidental issues arising in the context of an applicable defence, even if such issues could not be presented before it as independent claims due to a lack of jurisdictional basis.181 On the other hand, the WTO adjudicative bodies, in the only case where the issue has arisen, held that responding States cannot rely on the general defence of countermeasures in a WTO dispute due to, among others, jurisdictional limitations of the WTO adjudicative bodies.182 Their approach is reminiscent of the requirements for the admissibility of a counterclaim in international dispute settlement proceedings where the counterclaim must also fall, independently, within the subject-matter jurisdiction of the court in order to be entertained.183

The approach of the ICJ facilitates the litigation of economic sanctions as it allows the adjudicative body in question to properly rule on the applicability of the defences invoked by the Respondent and to discharge its function under the instrument that formed the basis of its jurisdiction. The findings of the ICJ suggest that the examination of applicable defences forms an indispensable part of the adjudicative body’s reasoning in the process of deciding on the international responsibility of the Respondent for breach of its obligations. Indeed, the power of an adjudicative body to examine a defence along with all issues that are indispensable to determine its applicability in the case before it follows from the “principle that jurisdiction to determine a breach implies jurisdiction to award compensation”,184 or more generally, to rule on the content of a State’s international responsibility. The Court would not be able to determine whether the Respondent bears international responsibility and the ensuing legal consequences without prior examination of any applicable defences.

Moreover, interim findings in the context of an applicable defence cannot be considered as independent verdicts. They form an integral part of an adjudicative body’s reasoning in the course of deciding the claims properly brought before it in accordance with the respective jurisdictional clause.185 As the ICJ suggests in the 2020 ICAO Council judgments, in the context of treaty-based disputes, interim findings made for the sole purpose of deciding whether the obligations under the treaty have been breached fall squarely within the power of the adjudicative body to rule on differences relating to the “application” of the treaty in question. Arguably, deciding on matters that are indispensable for the purpose of making a final ruling on the claims before it is part of the adjudicative body’s inherent powers. As the ICJ confirmed in the case of Nuclear Tests, 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”.186 It becomes readily evident that it would not be able to rule on the international responsibility of the Respondent or settle the dispute in question without examining any applicable defences in their entirety. Any other course of action would, in one way or another, hinder the adjudicative body from discharging its function under its constituting instrument and the applicable jurisdictional clause.

The approach of the WTO panels so far on this same issue is indeed starkly different from that of the ICJ. However, no other opportunities have arisen for the WTO to reconsider the relevance of countermeasures to WTO adjudication. It has already been more than 15 years since the Mexico – Soft Drinks Appellate Body Report was circulated. More litigation on economic sanctions would inevitably raise again before the WTO adjudicative bodies the question of the relationship between the defences under the general international law on State responsibility and the WTO provisions, as well as the question of the limits of their subject-matter jurisdiction in the context of applicable defences. Acknowledging the possibility to invoke countermeasures in the context of a WTO dispute,187 and the power of WTO adjudicative bodies to make interim findings on the existence of a prior internationally wrongful act, could pave the way for judicial review of a much broader range of economic sanctions, which may not be justifiable under the WTO security or general exceptions.

4.2 The Ambiguity on what Constitutes a Lawful Economic Sanction

Another possible reason for States’ reluctance to litigate economic sanctions may be the uncertainty surrounding the substantive requirements and the standard of reviewing the legality of economic sanctions that are prima facie incompatible with a State’s international obligations in the field of economic relations. This results in a vicious circle of perpetual legal uncertainty. Moreover, States would, understandably, be reluctant to initiate disputes before international judicial fora if the possibility of a successful outcome is conspicuously low. Indeed, this is a very valid consideration that emerges from the analysis of the relevant case law.

The ICJ seems to have taken a relatively strict approach to the substantive requirements of treaty exception clauses – or, at least stricter than that of the WTO. Although States enjoy a margin of appreciation in defining what constitutes an essential security interest, the Court has stipulated that they need to demonstrate a “reasonable” risk that threatens the security interest in question.188 It further requires that States demonstrate the “reasonableness” and “necessity” of the adopted measure and show that the measure was a calculated reaction to the identified risk and does not merely relate to it. However, the lack of relevant judgments means that these requirements have not really been tested in practice. Apart from the case of Nicaragua, where the manifest disproportionality of the US total trade embargo made it easy for the Court to rule on the (non-)applicability of the security exceptions, we do not have yet any other instances where the Court has actually applied the suggested criteria. Thus, there is not enough guidance or empirical evidence to assist in our understanding of what is and what is not a reasonable and necessary economic sanction. Similarly, there is no case law on the requirements for the imposition of a lawful countermeasure, or the invocation of a state of necessity. The requirement of proportionality as codified in Article 51 ARSIWA remains underexplored and thus, there is still significant uncertainty as to which economic sanctions would meet this requirement. The test under Article 25 ARSIWA requiring that the act is “the only way for the State to safeguard an essential interest against a grave and imminent peril” is also conspicuously underexplored in practice.

On the contrary, the two WTO panels that have examined the WTO security exceptions so far have established, overall, very lenient requirements for their successful invocation. The four-step test elaborated first in Russia – Transit and then reaffirmed in Saudi Arabia – IPR requires simply the identification of an emergency in international relations (very broadly defined in practice, as seen in the cases above), a temporal concurrence of the measures in question with the identified emergency, the articulation of an essential security interest in a “minimally satisfactory” manner and a plausible relationship between the measures in question and the protection of the articulated interest.189 The test does not require any hard evidence in support of the claim that the security interest in question is indeed in jeopardy or to show an actual, positive link between the enacted measure and the protection of such interest. It also establishes a very lenient good faith requirement which cannot prevent States from re-labelling measures as security-related even when they are enacted to pursue a different agenda. In the cases analysed above we have seen, for example, that Russia did not need to provide any evidence relating to the situation on the ground that would demonstrate a reasonable risk requiring an immediate response in the area of trade.190 Similarly, in the case of Saudi Arabia, it was not required that the Respondent substantiates its allegations regarding the prior wrongful acts of the Applicant. Overall, it becomes evident from the panel reports discussed above that a very wide spectrum of trade-restrictive measures could potentially be justified under the WTO security exceptions.

This low standard of review is even more striking when contrasted with the more detailed necessity test fleshed out in WTO jurisprudence regarding Article XX GATT. Assessment of a measure under Article XX GATT – or the similar general exceptions clause in the GATS – involves a “weighing and balancing” exercise, including examination of the measure’s contribution to the objective, its trade-restrictiveness and the importance of the stated objective.191 The necessity test in the case of the WTO security exceptions (or rather the absence thereof) is even more lenient than the test for measures “relating to” specific objectives under Article XX GATT, which is considered as the least restrictive amongst the sub-categories enumerated in Article XX, and yet still, requires that the Respondent demonstrates that the means are “reasonably related” to the ends;192 or, in other words, that the relationship between ends and means is “substantial”,193 “genuine”,194 or “observably … close and real”.195

This approach renders the potential challenge of economic sanctions under the WTO Agreements futile. As seen in the reports discussed above, the Respondent needs to put little to no effort to justify its measures under the security exceptions. The low standard of review almost counteracts the Panels’ previous finding that the exception is not really “self-judging”, as the margin of appreciation afforded to States is overall so broad that it produces almost the same result. With the exception of the finding that Saudi Arabia’s failure to prosecute piracy was not reasonably related to the – already unreasonable – policy of no-interaction-at-all between Saudi and Qatari nationals, every other measure that was challenged so far has been found consistent with the letter of Article XXI GATT, despite the fact that the arguments of the Respondents were, admittedly, vague and uninformative as to the existence of an emergency, the risk posed to their security interests and the necessity of the measures at hand. In the absence of strict criteria for the imposition of such sanctions, the invocation of security exceptions may well serve disguised economic purposes inconsistent with the WTO Agreements,196 or provide a back door for WTO-sanctioned retaliation measures. The need to strike a balance between the right of States to take measures necessary for the protection of their essential security interests and the possibility of abuse of the WTO system under the guise of security is fundamental. WTO adjudicative bodies should re-assess their approach to this issue and re-interpret the relevant WTO provisions in view of general international law and taking into consideration the relevant ICJ jurisprudence. It is interesting to note that some further requests for consultations regarding measures that constitute economic sanctions have already been filed and may provide such an opportunity to the WTO adjudicative bodies to revisit their previous findings, such as the request of Venezuela regarding US measures affecting goods and services of Venezuelan origin, which it formally characterises as “coercive trade-restrictive measures … in the context of attempts to isolate Venezuela economically.”197

Lastly, there is still uncertainty as to whether the defences under the general law on State responsibility, such as the defence of countermeasures, may be invoked, residually, as a defence in the context of a WTO dispute. Under general international law, a State is entitled to take countermeasures as an “injured State” in all instances codified in Article 42 ARSIWA: when the obligation breached is owed to that State individually; when it is owed to a group of States, including the State in question and it is specially affected by the breach; or when the performance of that obligation by the responsible State is a necessary condition of its performance by all the other States to which the obligation is owed.198 Moreover, under Article 48 ARSIWA a non-injured State is also entitled to invoke a State’s responsibility when the obligation breached is established for the protection of a collective interest or owed to the international community as a whole. Article 54 ARSIWA suggests that in cases of such collective interests third parties may also take “lawful measures against [the responsible State] to ensure cessation of the breach and reparation in the interest of the injured State or of the beneficiaries of the obligation breached”.199 Thus, the range of circumstances in which a State is entitled to take countermeasures under general international law is significantly broader than the types of countermeasures that could be potentially justified under the WTO security exceptions. Some examples of countermeasures that may not fall within the scope of the WTO exceptions are, for example, unilateral action taken in response to breaches of international human rights or humanitarian law, to a use of force against third States, to breaches of obligations relating to navigation or aviation, diplomatic law etc.200 Moreover, most third-party countermeasures may not meet the requirements of the WTO exceptions. A non-injured State would not, most of the time, be facing a direct security concern that would justify recourse to Article XXI.201 In recent WTO adjudication we have witnessed attempts to justify a broader range of trade-restrictive economic sanctions on the basis of a very broad reading of Article XX(a) GATT regarding the protection of “public morals”.202 WTO adjudicative bodies must clarify the relationship of the WTO Agreements with the general international law on countermeasures to provide clarity with respect to the defences that are available to WTO member States in order to justify economic sanctions that do not relate to security concerns. Such clarification could also prevent the – very visible – risk of overstretching the scope of the WTO general and security exceptions, whilst also avoiding compliance with the strict requirements for the imposition of a lawful countermeasure under general international law.

The initiation of more relevant disputes before competent international adjudicative fora would facilitate the re-examination and re-evaluation of the substantive requirements for the legality of economic sanctions that consist in the non-performance of international obligations. More litigation in this area could shed light on the grey areas identified above and contribute to the elucidation of the legal test for assessing the legality of economic sanctions under international law. International courts, through interpretation of the relevant legal instruments under the customary rules on treaty interpretation codified in Articles 31 and 32 VCLT,203 could assist in the clarification of the legal requirements under applicable exception clauses and provide more guidance on what constitutes a lawful economic sanction. As stated in Article 38 ICJ Statute, judicial decisions are a “subsidiary means for the determination of rules of law”204 and they are indeed an authoritative one.

At the same time, international courts are in a unique position to collect and analyse relevant State practice and opinio juris for the purposes of the identification or crystallisation of rules of customary international law in this area, or even the clarification of known rules of customary international law and their requirements, such as the customary defences under the law on State responsibility. This is because they are themselves the recipients of a large number of submissions by different States, which refer not only to their own practice but also the practice of others in order to confirm their own understanding of the law. This is especially true with respect to the ICJ, which is a court of exceptional authority, holding a unique position within the system of international law as the only judicial institution with general competence and universal reach.205 It is thus no surprise that it is often used as a “shortcut” for the identification of customary international law.206 As Cassese has aptly observed “[o]nce the ICJ has stated that a legal standard is part of customary international law, few would seriously challenge such a finding.”207

Moreover, States’ submissions in the context of litigation provide valuable insights regarding their approach to the law relating to economic sanctions. This is crucial for the purposes of interpreting relevant legal instruments as they may constitute evidence of subsequent State practice, provide information on the preparatory works of the treaty in question or shed light on the ordinary meaning of the terms used. They may also constitute evidence of opinio juris, especially if a State asserts in its pleadings that a certain practice is permitted, prohibited or mandated under customary international law.208

Lastly, and importantly, judgments and reports by international adjudicative bodies can spark reactions by States which can welcome the relevant findings as an accurate representation of the law in this area, or express disagreement and offer different legal opinions. This interactive process can lead to the development of the law relating the legality of economic sanctions and provide greater legal certainty, security, and predictability.

5 Conclusions

Economic sanctions have been continuously applied in a number of different international contexts and, being by definition a decentralized measure of self-help, it seems that the system can indeed work without the involvement of international courts. The European Union and the United States, which boast two of the most sophisticated sanctions regimes internationally, have currently approximately 40 active sanctions programmes each, most of which involve trade and other economic restrictions imposed on foreign States and which have rarely been challenged before inter-State international courts.209 Therefore, in principle, it is easy to envisage an international community where the imposition of economic sanctions is not challenged before judicial fora but is rather addressed exclusively through political means.

Nonetheless, the vagueness and imprecision of the regime governing the legality of economic sanctions is partly the result of this “no-courts” approach. There is simply not enough empirical evidence to inform our understanding of the relevant legal requirements.

Moreover, it is fair to say that the lack of a strong legal framework and the granting of a wide margin of appreciation for the imposition of unilateral measures without any “review” mechanism benefits mostly the powerful States that have the capacity to impose economic sanctions with less consequences for their own economy or even to their own economic benefit. Further to that, States often suffer from the imposition of disproportionate sanctions that not only put pressure on the governing power to change its behaviour or policies, but also have a strong negative impact on the civilian population. Challenging such sanctions on the basis of international human rights law is an option in certain cases. But the possibility of successfully challenging the scope of economic sanctions on the basis of international economic law could assist in the building of a more equitable and sustainable system of enforcing the international rule of law.

This article identified the grey areas of the law on economic sanctions in which the contribution of international courts could be crucial. However, there is an apparent reluctance of States to bring disputes relating to economic sanctions before inter-State adjudicative bodies. This article offered some possible explanations for this reluctance, which may relate to jurisdictional obstacles, uncertainty concerning the law, or the low chances of a successful challenge. Nonetheless, it is fair to say that the reluctance is most probably related to political rather than legal reasons. States are perhaps comfortable with the grey areas in the law of economic sanctions, do not want to bestow international adjudicative bodies with the power to make findings in this area of law, or do not consider international adjudication as the most appropriate forum for the resolution of relevant disputes.

It is, however, important to reflect on the pressing question of who benefits from the legal uncertainty and the laissez-faire approach to economic sanctions. In times of crisis, such as the current armed conflict between Russia and Ukraine, States tend to use economic sanctions unsparingly. In such cases, the lack of a strict supervisory mechanism, elaborate processes, or strict tick-boxes on what constitutes a lawful sanction may facilitate the quick and effective implementation of sanctions. However, in such cases of extreme crises, international law would always provide an unequivocal right to act and provide a sufficient legal basis for the imposition of the strictest of economic sanctions. The existence of a clear regime would assist in more ambiguous circumstances, as is more often the case in international law. It would assist in drawing a line between necessary and proportionate measures that aim at the implementation of international responsibility and the protection of essential State interests, and illegal means of economic coercion appearing in the guise of sanctions. Moreover, economic sanctions have always been a politically sensitive issue that has often divided the international community, as they are seen by many States – often the target States of harsh economic sanctions – as a form of war.210

Providing too wide a margin of appreciation to States to react unilaterally in circumstances where they deem that they stand on the “moral high ground” feeds into these arguments and fortifies the understanding of economic sanctions as a tool of economic imperialism. It also entails the clear danger that the exception, which is the need to suspend international economic obligations under exceptional circumstances, will swallow the rule.

International adjudication has its shortcomings. As also evidenced by the analysis above, international judgments are not perfect and do not always shed light on the particularities of the applicable rules. Nonetheless, more litigation on the legality of economic sanctions could contribute, at this present stage of legal uncertainty and vagueness, to the elucidation of the relevant legal regime and could boost security and predictability. Relevant findings also initiate an interactive process that can lead to the development of the law in the relevant area even if the judgment itself offers very little with respect to the clarification of the law. They prompt reactions from States which can in turn be taken into consideration in the interpretation of relevant rules, or in the identification or crystallisation of relevant custom. This process of clarification is necessary at the current stage of legal uncertainty, where the applicable rules are still fuzzy. Arguably, once the “rule-ness” of the relevant legal regime is firmly established, the need for court review and “supervision” will decrease, thus making it possible to envisage a fair system of international law enforcement without courts.

Acknowledgements

Many thanks are due to the participants of the ASIL/ICTIG symposium on International Law Without International Courts for their questions and comments, and to David Bigge for his feedback and assistance in the drafting of this article. I would also like to thank my supervisors at Oxford, Professor Catherine Redgwell and Professor Miles Jackson, and my academic advisor at Columbia, Professor Petros Mavroidis, for their comments on earlier versions of this article, which forms part of my doctoral research.

1

See objections to the use of the term “sanctions” to characterise unilateral restrictive measures and the proposal to reserve its use solely for measures imposed by a competent international organ (i.e. the UN Security Council) in Linos-Alexandre Sicilianos, “Sanctions Institutionnelles et Contre-Mesures : Tendances Recentes”, in Laura Picchio Forlati and Linos-Alexander Sicilianos (eds.), Les sanctions économiques en droit international (Brill, 2004), 4–5.

2

“Economic Sanctions” in John Grant and Craig Barker (eds.), Encyclopaedic Dictionary of International Law (OUP, 2009).

3

Andreas Lowenfeld, “International Economic Law” (2nd edition, OUP, 2008), 850.

4

David Cortright, “Economic Sanctions”, in Nigel Young (ed.), The Oxford International Encyclopedia of Peace (OUP, 2010).

5

See also the traditional definition of economic sanctions as “the deliberate withdrawal, or threat of withdrawal, of customary trade or financial relations [i.e.] … the levels of trade and financial activity that would probably have occurred in the absence of sanctions”, Gary Clyde Hufbauer, Jeffrey J. Schott, Kimberly Ann Elliott and Barbara Oegg, Economic Sanctions Reconsidered (3rd edition, Peterson Institute for International Economics, 2009).

6

For the idea that international law is a normative system in the context of which “each distinct treatment of a particular issue forms part of a ‘whole’”, see Anastasios Gourgourinis, “General/Particular International Law and Primary/Secondary Rules: Unitary Terminology of a Fragmented System”, 22 E.J.I.L. (2011) 993.

7

Charter of the United Nations (adopted 26 June 1945, entered into force 24 October 1945), 1 U.N.T.S. XVI.

8

See, indicatively, Art. XXI General Agreement on Tariffs and Trade, Marrakesh Agreement Annex 1A (adopted 15 April 1994, entered into force 1 January 1995), 1867 U.N.T.S. 187 (GATT); Art. XIV bis General Agreement on Trade in Services, Marrakesh Agreement Annex 1B (adopted 15 April 1994, entered into force 1 January 1995), 1869 U.N.T.S. 183 (GATS); Art. 2102 North American Free Trade Agreement (adopted 17 December 1992, entered into force 1 January 1994), 32 I.L.M. 289 (NAFTA).

9

Note, however, that, whilst the legal basis for imposing UN-mandated economic sanctions is straightforward, their specific scope, content, or implementation may still raise concerns on their compatibility with international law, especially in other fields of law such as human rights, see, e.g., the Kadi saga before the Court of Justice of the European Union where the EU acts implementing UN-mandated sanctions were challenged as incompatible with the Applicant’s fundamental rights, Case C–402/05 P and C–415/05, Kadi and Al Barakaat International Foundation v. Council and Commission [2008] ECR I–6351.

10

Lowenfeld, supra note 3, 850. See also Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Merits, Judgment, I.C.J. Reports 1986, p. 14 (Nicaragua 1986) [276].

11

See Antonios Tzanakopoulos, “We Who Are Not as Others: Sanctions and (Global) Security Governance”, in Robin Geiß and Nils Melzer (eds.), The Oxford Handbook of the International Law of Global Security (OUP, 2021), 779.

12

The term “general international law” is used in this article to denote “the body of legal principles, rules and procedures binding on and, in principle, applicable to all the subjects of the international legal system, the legal effects of which are erga omnes”, as opposed to treaty norms, which are only binding inter partes, see Bin Cheng, “Some Remarks on the Constituent Element(s) of General (or So-Called Customary) International Law”, in Antony Anghie and Garry Sturgess (eds.), Legal Visions of the 21st Century: Essays in Honour of Judge Christopher Weeramantry (Kluwer, 1998), 379; Gourgourinis, supra note 6, 1011.

13

2001 ILC Articles on the Responsibility of States for Internationally Wrongful Acts (ARSIWA), adopted by A/RES/56/83(2001) (ARSIWA).

14

Arts. 21, 22, 25 and 49–54 ARSIWA.

15

See, for example, Arts. XXXXI GATT.

16

For the role of general international law in the context of WTO disputes, see indicatively Joost Pauwelyn, “The Role of Public International Law in the WTO: How Far Can We Go?”, 95 A.J.I.L. (2001) 535; Anna Ventouratou, “The Law on State Responsibility and the World Trade Organization”, 22 The Journal of World Investment & Trade (2001) 759.

17

See, e.g., the referral of the Bolivarian Republic of Venezuela Pursuant to Article 14 of the Rome Statute to the Prosecutor of the International Criminal Court, alleging that the unilateral economic sanctions adopted by the United States and others against it constitute crimes against humanity, Situation in the Bolivarian Republic of Venezuela II, ICC-01/20, Referral (4 March 2020); or, the interstate communications submitted by Qatar against Saudi Arabia (8 March 2018, ICERD-ISC-2018/1) and the United Arab Emirates (8 March 2018, ICERD-ISC-2018/2) under Article 11 of the Convention on the Elimination of All Forms of Racial Discrimination (CERD), alleging that the comprehensive measures introduced by these States against Qatar, including a number of economic sanctions, were incompatible with CERD provisions.

18

See, e.g., Stuart Davis and Immanuel Ness, “Why Are Economic Sanctions a Form of War?”, in Stuart Davis and Immanuel Ness (eds.), Sanctions as War: Anti-Imperialist Perspectives on American Geo-Economic Strategy (Brill, 2021); Christopher Wall, “Human Rights and Economic Sanctions: The New Imperialism”, 22 Fordham International Law Journal (1998) 577.

19

See the sanctions timeline in relation to Russia’s war on Ukraine, as reported by Chad Bown at the Peterson Institute for International Economics, available at <https://www.piie.com/blogs/realtime-economic-issues-watch/russias-war-ukraine-sanctions-timeline>.

20

Term borrowed from Sotirios-Ioannis Lekkas, “The Hybridity of International Lawmaking: Impressions and Afterthoughts from the ESIL 2021 Stockholm Conference”, 32 E.J.I.L. (2022) 1, 6.

21

Nicaragua 1986 [276].

22

Antonios Tzanakopoulos, “The Right to Be Free from Economic Coercion”, 4 Cambridge Journal of International & Comparative Law (2015) 616.

23

I.e., a clause included in a treaty with a view to provide options for settlement of disputes arising thereunder. See, similarly, Matina Papadaki, “Compromissory Clauses as the Gatekeepers of the Law to be ‘used’ in the ICJ and the PCIJ”, 5(3) J.I.D.S. (2014) 560, 561.

24

This reference seems to be the common denominator of compromissory clauses, see Jonathan Charney, “Compromissory Clauses and the Jurisdiction of the International Court of Justice”, 81 A.J.I.L. (1987) 855, 856; Matina Papadaki, “Compromissory Clauses as the Gatekeepers of the Law to Be ‘Used’ in the ICJ and the PCIJ”, 5 J.I.D.S. (2014) 1, 10.

25

Treaty of Friendship, Commerce and Navigation between the United States of America and the Republic of Nicaragua (United States of America-Nicaragua) (1956), 367 U.N.T.S. 3 (1956 FCN).

26

Treaty of Amity, Economic Relations and Consular Rights between the United States and Iran (United States of America-Iran) (1955), 284 U.N.T.S. 93 (1955 Treaty of Amity).

27

Art. XXI 1956 FCN; Art. XX 1955 Treaty of Amity.

28

Nicaragua 1986; Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2019, p. 7 (Certain Iranian Assets); Alleged Violations of the 1955 Treaty of Amity, Economic Relations, and Consular Rights (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 2021, p. 9 (Alleged Violations).

29

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), Judgment, I.C.J. Reports 2020, p. 172 and 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), Judgment, I.C.J. Reports 2020, p. 81 (2020 ICAO Council).

30

Convention on Civil Aviation (1944), 15 U.N.T.S. 295; International Air Services Transit Agreement (1944), 84 U.N.T.S. 389.

31

Nicaragua 1986 [123–125].

32

Nicaragua 1986 [276, 279].

33

Executive Order 12513 “Prohibiting trade and certain other transactions involving Nicaragua” (1 May 1985) 50 FR 18629, 3 CFR, 1985 Comp., p. 342; Nicaragua 1986 [125].

34

Nicaragua 1986 [280].

35

Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 1984, p. 392 (Nicaragua 1984), US Counter-memorial on Jurisdiction [179].

36

Nicaragua 1986 [222].

37

Ibid.

38

Nicaragua 1986 [225, 280, 282].

39

Nicaragua 1986 [222, 282].

40

See the remarks to the media of the Secretary of State (3 October 2018) announcing the termination available at <https://perma.cc/2V8J-3FPS> and Galbraith Jean, “Trump Administration Announces Withdrawal from Four International Agreements”, 113 A.J.I.L. (2019), 132.

41

See JCPOA [18–33].

42

See Executive Order 13846 “Reimposing Certain Sanctions With Respect to Iran” (6 August 2018).

43

Presidential Memorandum, “Ceasing US Participation in the JCPOA and Taking Additional Action to Counter Iran’s Malign Influence and Deny Iran All Paths to a Nuclear Weapon” (8 May 2018).

44

Alleged Violations, Application Instituting Proceedings (16 July 2018) [39–49].

45

Certain Iranian Assets [21].

46

Certain Iranian Assets [21–27].

47

Certain Iranian Assets, Application instituting proceedings [1].

48

Alleged Violations [40].

49

Alleged Violations [52–53] and references therein.

50

Ibid.

51

Nuclear Tests Case (Australia v. France), Jurisdiction and Admissibility, Judgment of 20 December 1974, I.C.J. Reports 1974, p. 253 (Nuclear Tests) [29].

52

Alleged Violations [59].

53

Ibid.

54

Case Concerning United States Diplomatic and Consular Staff in Tehran (United States v. Iran), Judgment, I.C.J. Reports 1980, p. 3 (Tehran Hostages) [37].

55

Alleged Violations [56] by reference to Case Concerning Oil Platforms (Islamic Republic of Iran v. United States of America), Preliminary Objections, Judgment, I.C.J. Reports 1996, p. 803 (Oil Platforms 1996) [21].

56

Alleged Violations [57].

57

Alleged Violations [60].

58

Nicaragua (1986) [222]; see also, similarly, in Oil Platforms (1996) [20].

59

Certain Iranian Assets [40].

60

Alleged Violations [98].

61

Alleged Violations [98].

62

Certain Iranian Assets [45–47]; Alleged Violations [109, 113].

63

Alleged Violations [111].

64

Alleged Violations [112] where the Court refers to its previous analysis in Nicaragua 1986 [224].

65

Alleged Violations [110–113].

66

Nicaragua 1986 [224].

67

Nicaragua 1986 [224] (emphasis added); see, similarly, Alleged Violations [112].

68

Nicaragua 1986 [281].

69

Nicaragua 1986 [222].

70

Ibid.

71

Oil Platforms 2003 [43].

72

Nicaragua 1986 [224, 282] (emphasis added).

73

Nicaragua 1986 [282]; similarly, Oil Platforms 2003 [43].

74

See supra note 29.

75

See the list of 13 demands issued by the Quartet as conditions for ending the Qatari blockade, as reported at <https://www.theguardian.com/world/2017/jun/23/close-al-jazeera-saudi-arabia-issues-qatar-with-13-demands-to-end-blockade>, which is indicative of the reasons presented by the Quartet to justify the imposition of its embargo.

76

2020 ICAO Council [21].

77

ICJ, Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Qatar v. United Arab Emirates); 2020 ICAO Council; CERD inter-State communications; PCA Arbitrations pursuant to Article 32 of the Constitution of the Universal Postal Union. See also investment arbitral proceedings initiated by Qatari investors in beIN Corporation v. Saudi Arabia; Qatar Pharma and Al Sulaiti v. Saudi Arabia; Qatar Airways v. Bahrain/Egypt/Saudi Arabia/UAE.

78

2020 ICAO Council [24].

79

2020 ICAO Council [49].

80

Appeal Relating to the Jurisdiction of the ICAO Council (India v. Pakistan), Judgment of 18 August 1972, I.C.J. Reports 1972, p. 46 [29–32].

81

2020 ICAO Council [61].

82

2020 ICAO Council [60], but cf. Declaration of Judge Gevorgian, which takes a different view with respect to the powers of “non-judicial” dispute settlement bodies such as the ICAO Council.

83

Agreement on Trade-Related Aspects of Intellectual Property Rights, Marrakesh Agreement Annex 1C (adopted 15 April 1994, entered into force 1 January 1995), 1869 U.N.T.S. 299 (TRIPS).

84

Michael Hahn, “Vital Interests and the Law of GATT: Analysis of GATT’s Security Exception”, 12 Mich. J. Int’l L. (1991) 558, 567, 569.

85

“Guidelines on Implementation and Evaluation of Restrictive Measures (Sanctions) in the framework of the EU Common Foreign and Security Policy” (4 May 2018) [11].

86

Glyn Ayres and Andrew D. Mitchell, “General and Security Exceptions Under the GATT and the GATS”, in Indira Carr, Jahid Bhuiyan and Shawkat Alam (eds.), International Trade Law and WTO (Federation Press, 2012).

87

Art. XXI(b) GATT.

88

Russia – Measures Concerning Traffic in Transit, Panel Report, WT/DS512/R, 5 April 2019 (adopted 26 April 2019) (Russia – Transit).

89

Roger P. Alford, “The Self-Judging WTO Security Exception”, 3 Utah L. Rev. (2011) 697, 698.

90

See, e.g., Hahn, supra note 84, 586; Dapo Akande and Sope Williams, “International Adjudication on National Security Issues: What Role for the WTO”, 43 Va. J. Int’l L. (2002) 365, 386.

91

Nicaragua 1986 [222].

92

See outline of the relevant arguments at Hannes Schloemann and Stefan Ohlhoff, “Constitutionalization and Dispute Settlement in the WTO: National Security As an Issue of Competence”, 93 A.J.I.L. (1999) 424, 431.

93

Akande and Williams, supra note 90, 374 and references therein. Note, however, the critical findings of the GATT 1947 Panel in its (unadopted) report in the case of United States – Trade Measures Affecting Nicaragua, 13 October 1986, GATT Doc. L/6053 [5.17].

94

See arguments of the US and Nicaragua in US – Helms Burton and Nicaragua – Imports from Honduras and Colombia, as summarised in ibid., 376–377. More recently, see the similar arguments of Russia and Saudi Arabia in Russia – Transit and Saudi Arabia – IPR, further analysed below.

95

The GATT security exceptions were also invoked a few times in the GATT 1947 era, but no definitive interpretation of their scope has been offered by the GATT panels. For an overview of the relevant practice, see ibid. 373 ff; Schloemann and Ohlhoff, supra note 92, 432; Richard Whitt, “The Politics of Procedure: An Examination of the GATT Dispute Settlement Panel and the Article XXI Defense in the Context of the U.S. Embargo of Nicaragua”, 19 L. & Pol. in Int’l Bus. (1987) 603, 617.

96

Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights, Panel Report, WT/DS567/R (circulated 16 June 2020) (Saudi Arabia – IPR).

97

Russia – Transit(PR) [7.1–7.2].

98

Russia – Transit(PR) [7.3–7.4].

99

Note that these economic restrictions, including an import ban on goods from Crimea and Sevastopol, restrictions on trade and investment in certain economic sectors, a prohibition to supply tourism services and an export and/or import ban for certain goods and technologies, are also prima facie inconsistent with WTO obligations of the imposing States (primarily the US and the EU). However, their legality has not been challenged before the WTO. For an overview of the relevant restrictive measures, see Rostam Neuwirth and Alexandr Svetlicinii, “The Economic Sanctions over the Ukraine Conflict and the WTO: ‘Catch-XXI’ and the Revival of the Debate on Security Exceptions”, 49 J.W.T. (2015) 891, 897–903.

100

The Panel itself in the context of this dispute implied that there is a “clear correlation” between Ukraine’s political decisions and Russia’s measures taken against it, see Russia – Transit [7.141–7.142].

101

Russia – Transit [7.102].

102

See Nicaragua (1986) [222] and text accompanying, supra note 91.

103

Russia – Transit [7.103]. See, similarly, Saudi Arabia – IPR [7.10–7.23].

104

Russia – Transit [7.103, n. 183].

105

Russia – Transit [7.65–7.71].

106

Russia – Transit [7.65 ff].

107

Russia – Transit [7.79].

108

Russia – Transit [7.83–7.98].

109

Russia – Transit [7.98].

110

Russia – Transit [7.71].

111

Russia – Transit [7.72].

112

Ibid.

113

Ibid.

114

Russia – Transit [7.75–7.76].

115

Russia – Transit [7.70].

116

Russia – Transit [7.115, 7.118].

117

Russia – Transit [7.114].

118

Russia – Transit [7.119].

119

Russia – Transit [7.122].

120

Russia – Transit [7.123].

121

Russia – Transit [7.121].

122

Russia – Transit [7.127].

123

Russia – Transit [7.130].

124

Russia – Transit [7.131].

125

Russia – Transit [7.134].

126

Russia – Transit [7.137].

127

Russia – Transit [7.132–7.133].

128

Russia – Transit [7.138] (emphasis added).

129

Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear, Appellate Body Report, AB-2016–1, WT/DS461/AB/R, 7 June 2016 (adopted 22 June 2016) (Colombia – Textiles) [5.68]; Brazil – Certain Measures Concerning Taxation and Charges, Panel Report, WT/DS472/R, WT/DS497/R, 30 August 2017 (adopted 11 January 2019) [7.570]; India – Certain Measures Relating to Solar Cells and Solar Modules, Appellate Body Report, AB-2016–3, WT/DS456/AB/R, 16 September 2016 (adopted 14 October 2016) [5.58].

130

Russia – Transit [7.138].

131

Russia – Transit [7.145].

132

Russia – Transit [7.141–7.142].

133

Saudi Arabia – IPR(PR) [2.46].

134

See supra text accompanying notes 74–77.

135

See also Qatar – Goods from the UAE.

136

Saudi Arabia – IPR(PR) [2.16].

137

Saudi Arabia – IPR(PR) [7.199, 7.221].

138

Saudi Arabia – IPR(PR) [7.40].

139

Saudi Arabia – IPR(PR) [7.241–7.242]. This is similar to the analogous application of the Art. XX GATT criteria in the analysis of Art. XIV GATS.

140

Saudi Arabia – IPR(PR) [7.259].

141

Saudi Arabia – IPR(PR) [7.260] and citations therein.

142

Saudi Arabia – IPR(PR) [7.261].

143

Such as self-defence, countermeasures and necessity under general international law, codified in Arts. 21, 22, 25 and 49–54 ARSIWA.

144

Saudi Arabia – IPR(PR) [7.263].

145

Saudi Arabia – IPR(PR) [7.264].

146

An analogy can be drawn here with the reasoning of WTO panels and the AB in the determination of the likeness of products, where they look at the market before the introduction of the challenged measures which may have distorted the competition. See, e.g., Japan – Alcoholic Beverages and Korea – Alcoholic Beverages.

147

Saudi Arabia – IPR(PR) [7.281–7.282].

148

Saudi Arabia – IPR(PR) [7.285].

149

Measures taken by the Quartet that criminalise any expression of sympathy for Qatar or objection to the measures taken against it.

150

Saudi Arabia – IPR(PR) [7.286–7.288].

151

Saudi Arabia – IPR(PR) [7.289–7.290].

152

Saudi Arabia – IPR(PR) [7.291].

153

Art. 49 ARSIWA.

154

Commentary to Art. 49 ARSIWA [4].

155

Saudi Arabia – IPR(PR) [7.294].

156

Mexico – Tax measures on soft drinks and other beverages, Panel Report, WT/DS308/R, 7 October 2005 (adopted 24 March 2006) (Mexico – Soft Drinks PR) [8.162].

157

Mexico – Soft Drinks PR [8.170].

158

Mexico – Soft Drinks PR [8.194]; Mexico – Tax measures on soft drinks and other beverages, Appellate Body Report, AB-2005-10, WT/DS308/AB/R, 6 March 2006 (adopted 24 March 2006) (Mexico – Soft Drinks ABR) [75].

159

Mexico – Soft Drinks ABR [75].

160

Mexico – Soft Drinks ABR [77].

161

Ibid.

162

Mexico – Soft Drinks ABR [78].

163

Mexico – Soft Drinks ABR [78, 56].

164

Mexico – Soft Drinks ABR [56], n. 173 (emphasis in original).

165

Mexico – Soft Drinks ABR [56].

166

Note that the same approach was adopted by arbitral tribunals constituted under NAFTA in Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. Mexico, ICSID Case No. ARB/(AF)/04/5, Award (21 November 2007), para. 128; Corn Products International, Inc. v. Mexico, ICSID Case No. ARB/(AF)/04/1, Decision on Responsibility (15 January 2008), para. 180.

167

See Shabtai Rosenne, The Law and Practice of the International Court, 1920–2005, Vol. II – Jurisdiction (Brill, 2006), 549.

168

As of today (January 2022). A list of all optional clause declarations is available online at <https://www.icj-cij.org/en/declarations>.

169

Art. 36(3) Statute of the International Court of Justice (adopted 26 June 1945, entered into force 24 October 1945), 1 U.N.T.S. XVI (ICJ Statute) already recognises the right of States to modify the scope of their optional clause declarations and the ICJ has confirmed this several times in its jurisprudence, see, e.g., Nicaragua 1984 [59].

170

Out of 18 disputes submitted to the Court on the basis of a special agreement (as of 31 July 2019), only two disputes did not concern rights over territory. For a list of all disputes submitted to the Court on the basis of special agreements, see Yearbook of the International Court of Justice 2018–2019, Annex 6.

171

The most important example is the American Treaty on Pacific Settlement (Pact of Bogotá) (30 U.N.T.S. 55) which has been used several times. The 1957 European Convention for the Peaceful Settlement of Disputes (329 U.N.T.S. 243) is another example from the European continent.

172

I.e., under Art. 1 and Appendix 1 DSU: the Marrakesh Agreement, the GATT, the GATS, the TRIPS and the DSU itself, as well as any applicable Plurilateral Trade Agreement.

173

Brazil – Measures Affecting Desiccated Coconut, Appellate Body Report, AB-1996-4, WT/DS22/AB/R, 21 February 1997 (adopted 20 March 1997), pp. 12–13.

174

Nicaragua 1986 [225].

175

Nicaragua 1986 [282]; Certain Iranian Assets [45, 47]; Alleged Violations [109].

176

See supra text accompanying notes 48–57.

177

Nicaragua 1984 [96].

178

Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, I.C.J. Reports 1996, p. 226 [13] and references therein.

179

See supra text accompanying notes 35–39.

180

See supra text accompanying note 101.

181

See Section 2.3 above.

182

See Section 3.1.3 above.

183

See, e.g., Art. 80(1), Rules of the Court (1978, as amended in 2001) according to which “[a] counter-claim may be presented provided that it is directly connected with the subject-matter of the claim of the other party and that it comes within the jurisdiction of the Court” (emphasis added). See, similarly, Art. 46 ICSID Convention which provides that “except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine any incidental or additional claims or counter-claims arising directly out of the subject-matter of the dispute provided that they are within the scope of the consent of the parties and are otherwise within the jurisdiction of the Centre” (emphasis added).

184

James Crawford, State Responsibility – The General Part (CUP, 2013), 599.

185

Joost Pauwelyn and Luiz Eduardo Salles, “Forum Shopping Before International Tribunals: (Real) Concerns, (Im)Possible Solutions”, 42 Cornell Int’l L.J. (2009) 101.

186

Nuclear Tests [23].

187

For arguments in favour of the residual applicability of countermeasures in the context of WTO disputes, see Anastasios Gourgourinis, Equity and Equitable Principles in the World Trade Organization: Addressing Conflicts and Overlaps between the WTO and Other Regimes (Routledge, 2015), 203; Ventouratou, supra note 16, 797.

188

See supra text accompanying note 67.

189

See analysis in Sections 3.1.1 and 3.1.2 above.

190

See supra text accompanying notes 116–117.

191

See, e.g., Colombia – Textiles [5.70] and citations therein.

192

United States – Import Prohibition of Certain Shrimp and Shrimp Products, Appellate Body Report, AB-1998–4, WT/DS58/AB/R, 12 October 1998 (adopted 6 November 1998) (US – Shrimp) [141].

193

United States – Standards for Reformulated and Conventional Gasoline, Appellate Body Report, AB-1996–1, WT/DS2/AB/R, 29 April 1996 (adopted 20 May 1996), p. 19.

194

Brazil – Measures Affecting Imports of Retreaded Tyres, Appellate Body, AB-2007–4, WT/DS332/AB/R, 17 December 2007 (adopted 17 December 2007) [210].

195

US – Shrimp [141].

196

Hahn, supra note 84, 560.

197

See United States – Measures Relating to Trade in Goods and Services, Request for consultations by Venezuela (8 January 2019), WT/DS574/1, G/L/1289, S/L/420.

198

See Arts. 42 and 49 ARSIWA.

199

Note the controversy on whether this provision recognises the right of third-states to take countermeasures, see, e.g., Denis Alland, “Countermeasures of General Interest”, 13 E.J.I.L. (2002) 1221. On the legality of third-party countermeasures, see more generally Martin Dawidowicz, Third-Party Countermeasures in International Law (CUP, 2017).

200

Note, however, the possibility that some of these economic sanctions are justified under the WTO General Exception on the protection of public morals, which has never been examined so far in the case law of the WTO.

201

Cf. Matthias Herdegen, Principles of International Economic Law (2nd edition, OUP, 2016), 246–247.

202

See United StatesTariff Measures on Certain Goods from China, Panel Report, WT/DS543/R, 15 September 2020 [7.113 ff.].

203

Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980), 1155 U.N.T.S. 331. The customary nature of these rules has been consistently reaffirmed both by the ICJ, see, e.g., in recent jurisprudence Alleged Violations of Sovereign Rights and Maritime Spaces in the Caribbean Sea (Nicaragua v. Colombia), Preliminary Objections, Judgment, I.C.J. Reports 2016, p. 3 [35]; Question of the Delimitation of the Continental Shelf between Nicaragua and Colombia beyond 200 nautical miles from the Nicaraguan Coast (Nicaragua v. Colombia), Preliminary Objections, I.C.J. Reports 2016, p. 100, [33]; and the WTO adjudicative bodies, see, e.g., US – Gasoline, 16–17; Appellate Body Report, US – Carbon Steel, adopted 28 November 2002, AB-2002–4, WT/DS213/AB/R, WT/DS213/AB/R/Corr.1, paras. 61–62; Appellate Body Report, US – Continued Zeroing, adopted 4 February 2009, AB-2008–11, WT/DS350/AB/R, para. 268.

204

Art. 38(1)(d) ICJ Statute.

205

Abdul Koroma, “The Application of International Law by the International Court of Justice” (2011) 4 Collected Courses, Xiamen Academy 22; Alain Pellet and Daniel Müller, “Article 38”, in Andreas Zimmermann et al. (eds.), The Statute of the International Court of Justice: A Commentary (3rd edition, OUP, 2019), 949.

206

See Rowan Nicholson, “The International Court of Justice as a ‘Shortcut’ to Identifying Custom”, 20 The Law and Practice of International Courts and Tribunals (2021), 490.

207

Antonio Cassese, “The International Court of Justice: Is it High Time to Restyle the Respected Old Lady?”, in Antonio Cassese (ed.), Realizing Utopia: The Future of International Law (OUP, 2012), 239–240.

208

ILC, “Conclusions on the Identification of Customary International Law”, in Report of the International Law Commission – Seventieth session (30 April–1 June and 2 July–10 August 2018), General Assembly Official Records Seventy-third Session Supplement No. 10 (A/73/10) [66] Commentary to Conclusion 10, para. 4.

210

See, e.g., the speech of the President of Venezuela, Nicolás Maduro, before the UN General Assembly on 22 September 2021, characterising the economic and financial sanctions imposed against Venezuela as a “fierce campaign of permanent and systematic aggression … coming from the United States and its allies”, as reported at <https://news.un.org/en/story/2021/09/1100822>. Venezuela has also referred the matter of the economic sanctions imposed against it to the International Criminal Court, alleging that they constitute crimes against humanity, see supra note 17. Similarly, Iran has also characterised the US sanctions imposed against it as “crimes against humanity”, as reported at https://www.theguardian.com/world/2021/sep/21/iran-claims-it-will-be-ready-for-nuclear-deal-talks-in-next-few-weeks>. See also the statements of China’s Foreign Ministry spokesperson denouncing the sanctions imposed against China over human rights violations as “perverse actions” which “cannot destroy the overall shape of Xinjiang’s development, stop China’s progress, or reverse the trend of historical development”, as reported at <https://www.aljazeera.com/news/2021/12/14/china-says-will-strike-back-for-reckless-u-s-actions>. China, together with Russia, has consistently criticised the imposition of economic sanctions by Western powers, on several occasions, as ineffective means of addressing global crises and has accused imposing States of serving hidden agendas. See further on this issue: Wall, supra note 18; Dapo Akande, Payam Akhavan and Eirik Bjorge, “Economic Sanctions, International Law, and Crimes Against Humanity: Venezuela’s ICC Referral”, 115 AJ.I.L. (2021) 493; Wilpert Gregory, “The US War on Venezuela”, in Stuart Davis and Immanuel Ness (eds.), Sanctions as War: Anti-Imperialist Perspectives on American Geo-Economic Strategy (Brill, 2021); Jeremy Kuzmarov, “Trying to Unbalance Russia: The Fraudulent Origins and Impact of US Sanctions on Russia”, in Stuart Davis and Immanuel Ness (eds.), Sanctions as War: Anti-Imperialist Perspectives on American Geo-Economic Strategy (Brill, 2021); Beal Tim, “The Western Frontier: US Sanctions against North Korea and China”, in Stuart Davis and Immanuel Ness (eds.), Sanctions as War: Anti-Imperialist Perspectives on American Geo-Economic Strategy (Brill, 2021).

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