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

by Milena Sterio

[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.

http://opiniojuris.org/2013/05/08/guest-post-french-companies-may-build-in-the-west-bank-an-assessment-of-the-versailles-court-of-appeals-case/

5 Responses

  1. I found your view interesting, as I did Eugine’s. I’m going to try to reconcile your view with Eugine’s and try to spot the area of divergence.
    Eugine’s post says
    “Crucially, the Court held that only the Government of Israel, and not private parties, can violate the relevant provisions of the Geneva Conventions.”
     You said
    “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).”
    These two are in agreement.
    Eugine then says
    “This is an extraordinarily important holding in light of the decades old-debate about the meaning of 49(6) in the context of Israeli civilian migration into the West Bank. It is in direct opposition to the political and international law position on settlements. In the standard narrative, any migration of Israeli Jews past the Green Line, or the expansion of their residences and communities once there, is a war crime.”
    So Eugine is drawing a distinction between acts by civilians, which are not war crimes as civilians are not bound by 49(6).
    You by contrast say
    “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 “.
    However, I don’t think this last bit can be right. First of all, as you said (quoted above), you agreed the court DID make findings of international law itself, hence its conclusion private parties are not bound by the 4th GC.
    But secondly, you seem to be focussing on the settlements as if every ‘migration of Israeli Jews past the Green Line, or the expansion of their residences and communities once there’ is a state act and therefore illegal. However, Eugine contends the court has ruled these are private acts and therefore not illegal.
    So the question is, what amounts to “a state act” and what amounts to a “private act”?
     The French judgment here seems to be quite wide in terms of the legal status of acts by individuals under international law. It seems now no individual or private company can be held to have breached international law.
    But Eugine does seem to be wrong that this implies Israel itself cannot be in breach of international law.
    It seems obvious to say that an act by an individual cannot be directly attributed to an act of the state, but there is usually a state responsibility to prevent such acts that can be. Eg, failure by a state to criminalise in its domestic law and prosecute an individual for war crimes would result in state liability.
    But this is where things seem to get more murky. People often talk blandly about “Israel’s illegal settlement activities”. But what exactly are these activities?
    If a settler extends their garden, this is clearly an individual act. But to tie this act to Israel itself, we must conclude Israel is under a duty to stop that individual extending his garden? If I, a UK citizen, were to build a home in France and extend its garden, the UK is not under a duty to stop me. It’s a matter for the French.
    So if a settler living in the West Bank (assuming it is illegally occupied Palestinian lands), it is for the Palestinians to decide what to do under their law. But the Palestinians are occupied, so the occupier must apply that law of the land prior to its occupation ie some hybrid between 1967 Jordanian law and the law of the 1947 British mandate. Which ever law it is, there is clearly no express law that says Jews, or even any foreigner is not permitted to live anywhere in that state or extend a garden.
    So it now comes down to the details of planning law from an ancient and antiquated legal system.
    So lets say the garden extension did breach planning law Israel has failed to implement the law. Israel’s breach of international law would not have been Art49(6) but will be some other article that requires the occupying power to correctly and fully enforce the relevant law (eg planning law) prior to its occupation.
    Hardly a war crime up there with the Warsaw ghetto. Most state’s governments don’t even do that all the time in their own countries.
    So if failure to prevent an extension of a house is not a state act that breaches of Art 49(6), what are the ‘acts of illegal settlement activities’ that do? Perhaps giving planning permission to various settlements might be. But isn’t planning permission within the ambit of the occupying power? How about recognising an illegal settlement 15 years after it was built? But that act does not actually results in any transferring of people as they actually transferred years ago. So that is hard to justify amounts to a breach under 49(6).
    The only ‘act’ in Israel’s ‘illegal settlement activities’ I can think of that might qualify is providing financial incentives to Israelis to move to the West Bank.
    In conclusion, I think that Eugine is right that the French court’s conclusion that no private parties can breach 49(6) makes a profound difference because almost all the legal arguments I have heard tend to be based on individual actions, not states. Thus the argument alleging Israel’s breach of 49(6) at the very least needs to be substantially rewritten so that all alleged breaches by individuals are replaced with breaches by states.
    But Milena is also right that acts of ‘illegal settlement activities’ by Israel itself can breach 49(6). It all depends on whether this fuzzy phrase ‘illegal settlement activities’ can be translated into tangible acts of wrongdoing by Israel. I have managed to find one such act (Israel’s state subsidies of some settlement homes). But given all the fuss made about them, I was hoping to find much more than that.
    Help / criticisms appreciated.

  2. @Sebastian
    ==But the Palestinians are occupied, so the occupier must apply that law of the land prior to its occupation ie some hybrid between 1967 Jordanian law and the law of the 1947 British mandate.==

    Unless the International Law creates other obligations for Israel. For instance if the Jordanian law and the law of the 1947 British mandate did not forbid genocide in the occupied territories, it does not follow that the state of Israel could turn a blind eye if the Israeli citizens decided to commit genocide in the occupied territories. The same goes the other way around. Imagine that Jordan would have had a law obligating the state to commit genocide on Jews. It does not follow that the state of Israel is obligated to commit genocide on Jews.

  3. @Mihai
    Thanks for reading and considering my analysis and offering your view on them.
    I was deliberately vague about the exact details of the applicable law Israel is required to uphold in any ‘occupied Palestinian territories’ because those specific details are not really important with respect to the big picture issues I raised.
    I agree the laws in all domestic legal systems are often amended by certain provisions of international law (notably the Universal declaration of human rights) and this includes the strange hybrid between 1967 Jordanian and 1947 British Mandate law Israel is required to apply.
    But your point re genocide illustrates my argument very well. It is easy to translate acts of genocide that you raised into specific charges against the occupying power. 1) Duty: Almost all domestic legal systems make murder unlawful. The occupying power is under a legal duty to enforce this law. 2) Breach: Failure to make reasonable efforts to stop the murders. 3) Consequences: the occupying power can now be held in some way complicit in the genocide.
    However, constructing such a case that holds Israel directly responsible for some settler building a garden extension is not so easy.
    Let’s imagine for a second it wasn’t Israelis moving into the West Bank but ethnic Chinese. 1) Duty: There are no international law provisions relating to how governments must treat immigrants (illegal or otherwise) so the occupying power is under no legal duty to expel them. Further, international law does not go into the tedious details of planning laws so the occupying power is under no legal duty to prevent the immigrants from expanding their houses. Hence, I cannot find any way of holding the state of Israel responsible for acts by Israeli settlers as individuals.
    Just to remind you why this issue is important. Both Eugine and Milena agree that acts by individuals are not regulated by international law as per the French judgement. Eugine concludes this means settlement activities by in dividuals are not therefore a breach of international law by Israel itself, while Milena contends they are. Hence, to determine who is right, we need to determine whether we can legally hold Israel responsible for ‘settlement activities’ carried out by individuals.

  4. Sebastian said “the court DID make findings of international law itself, hence its conclusion private parties are not bound by the 4th GC”.
    The question before the court was not whether individuals were bound by the 4th GC, but rather if the validity of Alstom-Citypass contracts could be challenged on the ground that the object and purpose of said contracts breached international law (’cause’ in French). By rejecting the different grounds raised by the appellants, the court found that it could not void said contracts. One of the grounds rejected was whether provisions of the GCs were ‘directly applicable’ before domestic courts (i.e. whether the treaty conferred subjective rights on individuals that could then seek enforcement of said rights before domestic courts directly, without further acts of transposition into domestic law). Another ground rejected was the claim that customary international law provided a basis on which to ground corporate liability for violation of human rights.
    It is important to note that this case was not framed around international corporate liability (or even domestic tort law) but rather around the nullity of private contracts under French law.

Trackbacks and Pingbacks