The embargo on Qatar and its international law implications

On 5 June 2017, Saudi Arabia, Bahrain, the UAE and Egypt announced they were severing trade and diplomatic relations with Qatar. The four “embargo states” explained their decision on grounds of national security and stability concerns, alleging that Qatar supports ‘terrorism’ and interferes with the internal affairs of fellow members of the Gulf Cooperation Council (GCC).

The impact of the embargo on trade and economic activity in Qatar has been severe,
with logistic chains, shipping services and banking transactions affected. Air transport
services to and from Qatar have also been disrupted: the embargo states have prohibited
their airlines from flying to Doha and Qatar Airways has been forced to re-route services
over Bahraini airspace onwards to Iran to avoid flying over the territory of embargo
states from which they have been prohibited.

The embargo will inevitably lead to contractual disputes and the exercise of “force
majeure” clauses, but it is also likely to raise difficult issues of international trade law, in
particular those of the World Trade Organisation (“WTO”). The embargo states and Qatar
are all members of the WTO, and they all have obligations to offer “most favoured nation” and “national treatment” to the goods and services of other WTO members.

While air services are not covered by the WTO agreements, nevertheless the flow of trade in goods and services created by the embargo can only be operated if the exceptions for national security in Article XXI of the General Agreement in Tariffs and Trade (GATT) and its equivalent in other WTO agreements are justifiably invoked. For example, GATT Article XXI (b) permits WTO members to take “any action which it considers necessary for the protection of essential security interests… (iii) taken in time of war or other emergency in international relations”, and this provision has seen only 10 disputes litigated under the GATT up to 1994 and under the WTO since 1995, all of which have been settled by conciliation or abandoned as the parties found extra-judicial solutions.

The scope of the national security exception in Article XXI therefore remains obscure in
international trade law. This is not surprising given the ambiguity of its language and its
inherently political nature. Nevertheless, it is generally accepted by WTO commentators
that it cannot offer a justification for politically motivated actions and that there has
to be a genuine threat to the national security of the state invoking the measure. As
the original GATT Preparatory Committee reported in response to an inquiry as to the
meaning of essential security interests:

“We gave a good deal of thought to the question of the security exception which we
thought should be included … We recognized that there was a great danger of having
too wide an exception and we could not put it into the Charter, simply by saying: ‘by any
Member of measures relating to a Member’s security interests,’ because that would
permit anything under the sun. Therefore we thought it well to draft provisions which
would take care of real security interests and, at the same time, so far as we could, to
limit the exception so as to prevent the adoption of protection for maintaining industries
under every conceivable circumstance. … there must be some latitude here for security
measures. It is really a question of balance.“

There are differing views as to whether the circumstances invoked by the embargo states
as justification for their measures against Qatar are sufficient to rely on Article XXI.
Kuwait has already announced that it would try to bring the parties together to settle
their differences. That political initiative may bear fruit but should parties seek redress
under WTO law, the Dispute Settlement Understanding (“DSU”) offers the means for
WTO members to seek “consultations” as a first phase of dispute settlement. Private
parties affected by the embargo seeking WTO redress would therefore need the state of
Qatar to activate this remedy.

Consultations that fail to reach a satisfactory solution can
lead to the formation of a Panel to adjudicate the dispute, whose recommendations can
be appealed to the WTO Appellate Body. An alternative and increasingly used procedure
is to seek the “good offices” of the WTO Director-General to broker a settlement
of disputes. It will be interesting to see if Qatari interests and those affected by the
embargo will seek to exercise their rights under international trade treaties.

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