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Backtracking on Responsibility: French Court Absolves Veolia for Unlawful Railway Construction in Occupied Territory

This post was originally published on Dr. Nadia Bernaz’s Business and Human Rights blog, Rights as Usual.


On 22 March 2013 (a decision that became public more recently), the Versailles Court of Appeal dismissed the case against two French companies, Alstom and Veolia, for their involvement in a contract for the construction of a light railway between illegal Israeli settlements located in East Jerusalem, inside the Palestinian territory of the West Bank, and West Jerusalem, territory located inside Israel’s internationally-recognised borders.

The case was first submitted by the France Palestine Solidarity Association (AFPS) and the Palestine Liberation Organization (PLO) in February 2007 to the Nanterre Court of First Instance requesting the annulment of the contract concluded between the Israeli authorities and the French companies, due to the contract’s unlawful purpose of facilitating the establishment of Israel’s illegal settlements in occupied territory and the movement of Israeli Jewish settlers between Israel and their residences in occupied territory.

In May 2011, following several hearings, the Nanterre Court of ‘Grande Instance’ held that the conventional and customary international law invoked by the claimants – including provisions of the Geneva Conventions and Additional Protocol I thereto, including peremptory norms of international law (jus cogens) – did not create obligations that are “directly applicable” to private companies. It added that the violations in question were those of the Israeli state; international law violations did not invalidate the contract between the companies, which was governed by Israeli, and not French civil law. The Court also concluded that the claimants failed to demonstrate the proximity and causal link of the company’s actions to the Israeli authorities’ internationally unlawful conduct.

The recent March 2013 decision on appeal confirms and builds on this position, absolving the companies of any responsibility for their involvement in internationally unlawful acts, and maintaining the contracts’ validity under French law. Probably the most damning conclusion of the recent judgment on appeal is that the international law provisions relied on “do not create direct obligations that may be placed upon private companies.” The decision holds that private companies are not subjects of international law and do not have international legal personality – beyond the realm of economic and commercial acts governed by certain international instruments. As such, the international legal obligations relied on by the claimants were neither directly applicable to private companies, nor did they give rise to rights that can be claimed by individuals.

The Court then proceeded to dismiss the legal character and relevance of the companies’ obligations under their own voluntary codes, as well as the UN Global Compact. In so doing, the Court adopts a position that strikingly backtracks on the important international developments concerning the responsibility of multinational companies under international law, including to ‘protect, respect and remedy’ human rights. It also undoes what has come to be a commonly accepted position of international lawyers, as well as political and economic experts concerning multinational companies’ advanced international legal personality, which is oftentimes much more developed than other non-state subjects of international law, also due to the growing influence of companies over political and social realities worldwide.

Finally, although the Court ruled that the “occupying power can and should re-establish a normal public activity within the occupied country through administrative measures in the usual areas addressed by State services” and that as such “the building of a tramway by Israel is not prohibited”, it did not mention or discuss the fact that the railway was built for the purpose of linking illegal Israeli settlements in the occupied Palestinian territory of East Jerusalem with West Jerusalem, a service that neither benefits the Palestinian population, nor purports to do so. Since the Israeli government was not present in the proceedings, the Court stated that it cannot accept the petitioners’ claim that the contract between the French and the Israeli company constructing the railway had been concluded to further an ‘illicit’ purpose (that of Israel’s settlement project in occupied territory).

The Veolia case is also an interesting case study for the variety of means and methods used to promote and bring about respect for human rights and international law by corporations – including campaigning, advocacy and litigation. Many of these measures bore fruit, with early on in 2011 being an important turning-point, when, following overwhelming pressure, Veolia withdrew from the railway project. More recently, in February 2013, a top Norwegian financial adviser noted in a presentation to the largest pension fund in the UK, Hermes Investment Management, that Veolia is an outstanding example of a company that has suffered “expensive damage”, including loss of large contracts and reputational costs, due to its involvement in internationally unlawful acts in the occupied Palestinian territory. In 2012, Veolia was excluded from public contracts with UK local councils, under UK and EU procurement law, due to its involvement in the international law violations. Despite these successes, Veolia continues to provide services to the Israeli authorities involved in international law violations. It is servicing a landfill in the Jordan Valley area of the occupied West Bank, near the illegal Israeli settlement of Masua, and it continues to provide Veoliabuses to transport settlers from illegal settlements in occupied territory to Israel.

The recent Versailles Court’s decision unsettles, if not significantly undermines, the position of a group of French parliamentarians and a report commissioned by the French National Assembly’s Foreign Affairs Commission, condemning Israel’s creation of a spatial and racial “apartheid” in the Palestinian territory of the West Bank. It also puts the French government in an uncompromisingly awkward position vis-à-vis its, and the EU institutions’, existing foreign policy and legal commitments, including that of ensuring respect for “human rights and fundamental freedoms” and the “rule of law” (Article 6 of the EU Treaty), also set out in the ‘EU guidelines on the promotion of compliance with international humanitarian law’ in third countries. In this sense, the Court’s conclusions create both a legal and political dissonance for their apparent incompatibility with the stern condemnations made by French and EU institutions of Israeli settlements in occupied territory and their institutionalpractice vis-à-vis settlements in terms of EU-Israel relations.

Who, if not the EU, and its Member States, will ensure that the international legal order is not rendered into disrepute and that private actors operating from within the jurisdiction of the EU are not involved or contributing in any way to violations of international law by foreign authorities? It is undoubtedly in the interests of both France and the EU to ensure that their multinational companies do not undermine, or act in blatant contradiction of, the EU’s commitment to its proclaimed foreign policy and to the rule of law, international and internal.