Guest Post: French Companies May Build in the West Bank — An Assessment of the Versailles Court of Appeals Case

[Milena Sterio holds a dual J.D./maitrise en droit degree, and she is Associate Professor of Law at the Cleveland-Marshall College of Law, where she specializes in International Law and International Criminal Law.]

The Court of Appeal of Versailles, France, ruled last week on an important case regarding the civil liability of French companies for their role in the construction of a light rail tramway system in the Israeli-controlled West Bank.  The Versailles Court determined that the French companies’ participation in this construction project did not violate international law.  As this case has already sparked academic debate in the blogosphere (click here for excellent posts by Eugene Kontorovich and by Kevin Jon Heller), I will take this opportunity to discuss in more detail some of the legal issues involved, as well as to weigh in on the significance of the Versailles Court’s ruling.

The Jerusalem light rail system began operating in August 2011.  A French building conglomerate, Alstom Transport (as well as another company, called Veolia Transport; for the purposes of this post, I will refer to both of these as “Alstom” or “Alstom Transport” because the court’s discussion of legal issues and its ultimate ruling concerns both of these companies equally), had participated in the light rail’s construction, despite protests and political opposition to such participation in France.  The transaction, relevant for the purposes of the legal discussion below, was structured as follows: Alstom had formed an Israeli company, called Citypass, which then signed a general concession contract with the State of Israel.  Additionally, Alstom signed a series of separate construction contracts with Citypass.  Alstom was thus not a party to the general concession contract.  A pro-Palestinian group, Association France Palestine Solidarité (AFPS), filed a lawsuit against Alstom Transport in 2007 in a French lower court (Tribunal de Grande Instance de Nanterre); another pro-Palestinian organization, l’Organisation de Libération de la Palestine (OLP), later joined the lawsuit as co-plaintiff.

Plaintiffs argued that the French court should void Alstom’s construction contracts, because the general concession contract’s (between Citypass and Israel) object or purpose (“cause” in French) was illicit (because the State of Israel’s true motivation in the construction project was the continuance of illegal occupation in the West Bank, in violation of various international law provisions, such as the Hague and Geneva Conventions).  In order to support this argument, plaintiffs argued that the concession contract and the separate construction contracts should be viewed as a single group of contracts, and that if the concession contract had an illicit object or purpose, then automatically such an illicit object should be imputed to the separate construction contracts (a contract with an illicit object or purpose is considered against public policy and can be voided by a court).  In addition, plaintiffs requested that the court order Alstom to stop participating in the building project – an injunction-like request, which, if granted by the court, would have resulted in significant monetary fines (per-day) for Alstom, should Alstom have continued to build in Jerusalem (the French legal regime of “interdiction sous astreinte”).  The plaintiffs’ lawsuit was dismissed in 2011 by the Nanterre court, and the Versailles Court of Appeal confirmed the 2011 dismissal last week.

It is interesting to note, as an aside, that one of the plaintiffs in this action (AFPS) had also sued the French State in the administrative court (in France, any litigation opposing private litigants and the state must be filed within the country’s separate administrative court system) for its support of Alstom in the Jerusalem light rail construction project.  This lawsuit was dismissed by France’s highest administrative court, the so-called Conseil d’Etat.   Although this lawsuit presented intriguing legal issues as well, I will focus my comments below on the civil court litigation opposing Alstom and the pro-Palestinian organizations.

The Versailles Court first addressed procedural issues (for example, it confirmed that the two plaintiffs had standing to proceed with the lawsuit), and then turned to the complex substantive legal claims raised by the plaintiffs.  As explained above, OLP had argued that the construction contract was contrary to public policy (“ordre public” in French) and thus illegal, and that Alstom was liable under French civil law for participating in such an illegal contract and for not abiding by its corporate and ethical duties and responsibility.  The Versailles Court examined the relevant international law provisions on the law of occupation, which had been raised by the plaintiffs, including various articles of the Hague Conventions and of the Fourth Geneva Convention.  The Court concluded that these provisions were applicable to the State of Israel, and could have a bearing on the general concession contract.  However, at issue here were only the construction contracts to which Alstom was a party (Alstom had not been a party to the general concession contract); these construction contracts were legally distinct from the concession contract.  Even if one could claim that the concession contract had an illicit object or purpose and should be declared void as against public policy, the separate construction contracts would not be affected (or “contaminated” per the Court) by such a finding.  Thus, as distinct legal documents, construction contracts between Alstom and Citypass were not affected by any alleged illicit object or purpose of the general concession contract between Citypass and the State of Israel.  It follows that construction contracts between Alstom and Citypass were not void as against public policy.  The Versailles Court, perhaps wisely, chose not to comment on any imputed motivation or purposes behind Israel’s decision to construct the tramway system.

Next, the Versailles Court examined the so-called “effet direct” of various international law provisions contained in the Hague and Geneva Conventions – basically, the issue of whether these provisions could be invoked in French courts by private, non-State actors (something akin to the concept of treaty self-execution in the United States, and whether treaties can create a private cause of action).  The Court held that these international law norms could not create private rights of action in French courts, because, inter alia, the Fourth Geneva Convention does not speak of individual rights and instead focuses on “protected persons” or populations (the Court made a similar argument regarding the Hague Law provisions at issue).  In addition, the Court confirmed that the Hague and Geneva Convention only apply to State parties, and cannot apply directly to private companies (here, I agree with other commentators that the Court does not reach any new or extra-ordinary conclusions on this well-accepted point in international law).

The Versailles Court then analyzed the plaintiffs’ argument that, under customary law, multi-national corporations should be held liable for violations of human rights.  The Court referred to American Alien Tort Claims Act litigation, and specified that these cases were not relevant for the purposes of the French case as they discuss the application of American, domestic law, and because some of them have “penal” aspects.  The issue of corporate liability for human rights violation is both intriguing and important, as recent discussion on the Kiobel case has amply demonstrated, but in the interest of space, I will not address any such issues in this post.

Next, the Versailles Court addressed the argument that the Hague and Geneva Convention provisions on the law of occupation constitute jus cogens, and that as such, they constitute part of the French “ordre public” (public policy); any contract against public policy will be void under French law.  The Versailles Court rejected this argument: the Court considered that even if it could be proven that the relevant law of occupation provisions did constitute jus cogens, such provisions would only apply to State Parties and would not bind private corporations.  Thus, the Versailles Court held that Hague Law provisions, as well as Articles 49 and 53 of the Fourth Geneva Convention, were not applicable to a private entity such as Alstom.

Finally, the Versailles Court addressed the argument that Alstom had violated its corporate and ethical duties and responsibility.   The Court noted that the International Corporate Code of Conduct to which Alstom was a party was not binding in nature, and that respect of the said Code was purely voluntary.  The Court reached the same conclusion with respect to any ethical codes which Alstom had signed and may have violated through its participation in the Jerusalem light rail construction project.

Eugene Kontorovich argued that this case was a “landmark” decision; Kevin Jon Heller appeared much more skeptical, arguing instead that this court decision “tells us little, if anything, about whether Israel’s settlement activities qualify as the war crime of direct or indirect transfer of civilians into occupied territory.”  I agree with Kevin’s assessment that the Versailles Court avoids ruling on any controversial issues.  The Court determined that because the State of Israel was not a party to the present litigation, the Court had to limit itself to the examination of contracts signed by Alstom itself (the construction contracts) and could not rule on the legality of the concession contract to which Israel was a party.  The Court thus refused to comment on the alleged illicit contractual purpose (the illegal occupation and “colonization” of the West Bank), imputed to Israel by the plaintiffs.  It is not surprising that the French court would rule the way it did: its ruling is in perfect accordance with French civil law, and it was unnecessary for Versailles judges to venture into a discussion of state responsibility under international law.  Eugene may be correct also in his assessment that the Versailles Court upheld Alstom’s contracts because the project was “an important French industrial concern.”  However, this case is interesting and important because it illustrates the notion that a domestic court will not easily concern itself with international law matters, or, in the alternative, that a domestic court will adopt a strict view of international law, as a set of norms which bind purely State actors.  This view de facto allows state-supported private entities, such as Alstom, to engage in controversial projects which could be deemed illegal under international law.  The most intriguing issue, not raised directly by the Versailles case but important for future legal discussion, has to do with state responsibility, and the threshold amount of state involvement necessary to trigger such state responsibility.