COCOO CASES

ADNOC-COVESTRO DEAL

ADNOC-Covestro deal needs EU, UK, US, China and multiple other approvals

In an offer document published today, the German chemicals group also disclosed the need for foreign direct investment clearances in multiple European countries, as well as in Canada and the US.

That’s on top of approval under the EU’s new rules for vetting foreign subsidies. That stands out as the clearest obstacle to the deal’s completion (see MLex comment here).

Abu Dhabi’s state-owned oil company announced on Oct. 1 that it had agreed to buy Covestro for 62 euros a share, valuing the deal at 14.7 billion euros ($15.9 billion). ADNOC has also committed to inject 1.17 billion euros of capital into Covestro after the closing of the deal.

At the time, Covestro told investors the deal would require a “multitude” of regulatory approvals.

Today’s offer document said that the deal needs competition approval from the European Commission, plus in Brazil, Canada, China, the Common Market for Eastern and Southern Africa, Egypt, India, Japan, South Korea, Mexico, Morocco, South Africa, Switzerland, Taiwan, Turkey, the UK, the US, and Vietnam.

“[ADNOC] submitted a Case Team Allocation Request to the EU commission on 1 October 2024. Once the EU Commission allocates a team, [ADNOC] will engage in the prenotification discussions with the EU commission,” Covestro said.

The takeover needs foreign direct investment approvals from governments in Belgium, Canada, France, Germany, Italy, Spain, the UK, and the US.

It also needs approval from the commission under its Foreign Subsidies Regulation, which polices subsidies from abroad to ensure they’re not distorting the EU market.

The Abu Dhabi government wholly owns ADNOC, so the EU regulator might be concerned that it used unfair subsidies from the big-spending UAE state to finance Covestro’s acquisition or might use them to distort future competition in the EU.

According to the offer document, all the required approvals must be received “at the latest by Dec. 2, 2025.”

Please email editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.

 

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agenda.2030

vet.gratis/LA CARA OCULTA DE LA LUNA(L-j. DESDE 7PM

  ag2030 si pero no asi

the catch of the ag2030 is the forms of enforcement, of the 17 ODS (perfect platonic concepts=content). the only crack where the devil can sneak through, is a form that pretends to have content but does not. A mirage is the only gap through which he can harm us.  

ex. bangladesh was the most polluted and poor conuntry in the world. the ag2030 policies were enforced and failed, making it even worse. and many dying of hunger. 

ex. las vacas son el ppal contaminante de metano…pero la solucion de al ag230 es reducir su numero danando asi a agricultores y ganaderos…pero, hoy hay techs (genetic…) to produce cows with zero metano emissions.

ex. el RDecreto por el q el gob propone para limpiar las aguas costeras. como?:

-poder de expropiar a propietarios de 1a. linea de playa (a cambio de un usufructo de 30 anos)…

-acualmente la ag2030 esta usando ’emisarios marinos’, q no son sino tubos q echan la mierda al fondo del mar

en realidad, lo q necesitamos es:

-dejar de construir en zonas q deberian estar protegidas…(esto tb es causa de los danos de la dana).  y dejar construir en zoas q no deberian estar protegidas (pero q lo estan para asi especular con el precio de la propiedad…q tb causa la reduccion en la natalidad espanola)

-ampliar la capacidad de las depuradoras de los municipios costeros….la gran mayoria de municipios turisticos no tienen sistemas de depuracion de aguas capaces de absorber los residuos humanos producidos cuando hay gran afluencia de personas…..ex.en el mar menor solo necesita depuradoras , como han demostrado muchas universidades, y tb ‘brian lapointe’ 

-evitar incendios requiere cambiar el art.50 de la ley de montes [recoge la excepcion a la regla de la ley de montes (para evitar incendios, no se puede construir en los 30 anos siguientes tras un incendio forestal)]. esta excepcion dice q las ccaa pueden decidir construir inmediatamente tras un incendio forestal, cuando haya necesidades imperiosas de int.publico y sea recogido en Ley autonomica, y si hay razones de wpi nacional, habra de ser recogido en Ley nacional (ccgg). ………PERO ….estan construyendo parques eolicos inmediatamente tras incendio forestal, usando leyes autonomicas….esto es ilegal, porq los parques eolicos no son int.publ, ni de nec.imperiosa….ademas, si lo fuera, seria wpi nacional (requiriendo ley de ccgg)   


mlex:  Rich countries triple support against climate change at COP29


Breakthrough in Baku delivers $1.3tn “Baku Finance Goal”

– The Baku Finance Goal sets new global target to channel $1.3tn of climate finance to developing countries by 2035 in significant uplift. This includes a new core finance goal of $300bn that triples the previous $100bn target.
– Breakthroughs on the Baku Finance Goal and UN carbon markets defy expectations as a result of year of intensive multilateral diplomacy led by Azerbaijani COP29 Presidency.
– COP29 President Mukhtar Babayev: “The Baku Finance Goal represents the best possible deal we could reach. In a year of geopolitical fragmentation, people doubted that Azerbaijan could deliver. They doubted that everyone could agree. They were wrong on both counts.”
– Parties recognise the Government of the Republic of Azerbaijan and the people of Azerbaijan for their service to the global community as hosts of the UN Climate Change Conference.
– COP29 Presidency succeeds in getting the Fund for Loss and Damage up and running and ready to distribute money in 2025.

November 24, Baku: The COP29 Presidency of Azerbaijan today announced the agreement of the Baku Finance Goal (BFG), a new commitment to channel $1.3tn of climate finance to the developing world each year. Success on the COP29 Presidency’s top priority for the UN Climate Summit represents a significant uplift from the previous climate finance goal of $100 billion and will unlock a new wave of global investment.

The Baku Finance Goal contains a core target for developed countries to take the lead on mobilizing at least $300 billion per year for developing countries by 2035. This represents a $50bn increase on the previous draft text, and is the product of 48 hours of intensive diplomacy by the COP29 Presidency. It pays special consideration to support the least developed countries and small island developing states, with provisions on accessibility and transparency.

The Baku Finance Goal is the centrepiece of a package of agreements that deliver progress across all climate pillars. These breakthroughs are the result of months of intensive diplomacy by the Azerbaijani Presidency to deliver some of the most complex and controversial tasks in multilateral climate action. They mark a critical step in putting in place the means to deliver a pathway to 1.5C.

COP29 ended the decade-long wait for the conclusion of Article 6 negotiations on high integrity carbon markets under the UN. Financial flows from compliant carbon markets could reach $1 trillion per year by 2050. They also have the potential to reduce the cost of implementing national climate plans by $250 billion per year. When combined, the Baku Finance Goal and Article 6 will forever change the global climate finance architecture by redirecting investment to the developing world.

In the plenary session, Parties in Baku unanimously agreed to an expression of gratitude to the government of the Republic of Azerbaijan and to the people of Azerbaijan for the generosity and hospitality they demonstrated in hosting the 29th Conference of the Parties.

The COP29 Presidency also succeeded in getting the Fund for Loss and Damage up and running and ready to distribute money in 2025. This decision was long awaited by developing countries, including small island states, least developed countries, and African nations. This aligns with the priority set by the President of the Republic of Azerbaijan, Mr. Ilham Aliyev, to address the challenges posed by climate change impacts on small island states under the COP29 Presidency.

COP29 President Mukhtar Babayev said, “When the world came to Baku, people doubted that Azerbaijan could deliver. They doubted that everyone could agree. They were wrong on both counts. With this breakthrough, the Baku Finance Goal will turn billions into trillions over the next decade. We have secured a trebling of the core climate finance target for developing countries each year.”

“The Baku Finance Goal represents the best possible deal we could reach, and we have pushed the donor countries as far as possible. We have forever changed the global financial architecture and taken a significant step towards delivering the means to deliver a pathway to 1.5C. The years ahead will not be easy. The science shows that the challenges will only grow. Our ability to work together will be tested. The Baku Breakthrough will help us weather the coming storms.”

The successful agreement of the Baku Finance Goal comes as part of a series of achievements that the COP29 Presidency delivered and secured, as in Annex 1.

The full text of the Baku Finance Goal can be found here

Annex 1: COP29 achievements

Parallel to delivering a balanced package of negotiated priorities, the COP29 Presidency’s Action Agenda called on a wider group of stakeholders to contribute to global climate action.

The Action Agenda Initiatives confront some of the most pressing problems, shine a light on forgotten priorities, offer unique solutions based on the experiences and perspective of the host, and reinforce coherence and COP-to-COP continuity. These Initiatives were designed in an inclusive and transparent process in consultation with all stakeholders. They serve to complement existing initiatives and bring new, creative approaches to climate challenges.

Together, these Initiatives will support the implementation of ambitious climate action.

– Baku Initiative for Climate Finance, Investment and Trade (BICFIT) Dialogue: The COP29 Presidency brought UN agencies, international organisations, multilateral development banks, multilateral climate funds, the private sector, civil society, key coalition, and other stakeholders, alongside COP Presidencies and Parties together to ensure that finance, investment and trade remain at the centre of the climate agenda. Announced the new Baku Climate Coalition for SMEs Green Transition.

– Energy pledges and declarations: The COP29 Presidency launched its pledges and declarations on energy storage, grids, zones, corridors and hydrogen, which were endorsed by 150 Parties.

– COP29 Declaration on Green Digital Action: More than 75 governments and over 1,100 members of the digital tech community endorsed the declaration to use digital tools to reduce emissions and strengthen climate resilience.

– Baku Initiative on Human Development for Climate Resilience: A joint statement among 8 UN agencies, 3 MDBs and 3 climate funds, saw the adoption of the Baku Guiding Principles on Human Development for Climate Resilience and established the Baku COP Presidencies Continuity Coalition for Climate and Health.

– Climate and Health Continuity Coalition: Five COP Presidencies (COP26 to COP30), alongside the WHO Director-General, embedded health into the climate agenda—and advocated for health to be a core feature of future COP conferences—by introducing the Baku COP Presidencies Continuity Coalition for Climate and Health.

– Reducing Methane from Organic Waste Declaration: Over 50 countries—including 8 of the world’s 10 largest organic waste methane emitters and representing 51% of global methane emissions from organic waste—endorsed the declaration committing to sectoral targets to reduce methane from organic waste within future NDC, which will contribute to the implementation of the Global Methane Pledge.

– Baku Harmoniya Climate Initiative for Farmers: A platform that brings together the dispersed landscape of existing climate initiatives in the field of food and agriculture, in order to make support for farmers easier to find and to facilitate access to finance.

– COP29 MAP Declaration for Resilient and Healthy Cities: Brings together UN agencies and IGOs, MDBs, MCFs, philanthropic organisations, bilateral donors and implementing agencies for partnership and collaboration on urban climate finance, with over 160 endorsers, including more than 40 Parties, intending to work on multisectoral approaches to climate action and planning in urban areas. Launched Baku Continuity Coalition for Urban Climate Action, which takes a multisectoral and multilevel approach to continuity and coherence between COP, UNFCCC and UN Habitat urban processes.

– COP29 Declaration on Enhanced Action in Tourism: Commits more than 60 government endorsers to promote sustainable tourism practices by reducing emissions and increasing resilience in the sector—ultimately positioning tourism as a key component of climate solutions.

– COP29 Declaration on Water for Climate Action: With endorsers from over 50 countries, this declaration will take an integrated approach to combating the causes and impacts of climate change on water basins and water-related ecosystems. It advocates for the integrations of water-related mitigation and adaptation measures in national climate policies, including NDCs and NAPs.

Significant progress made throughout the course of the two weeks

In addition to its Action Agenda initiatives, the COP29 Presidency made progress in several priority areas for ambitious climate action. This included advancing transparency and securing funding for Loss and Damage. In addition to Presidency-led initiatives, Parties and other stakeholders stepped up and showed leadership with their own commitments.

– The COP29 Presidency placed a significant emphasis on the importance of transparency and Biennial Transparency Reports (BTRs) by launching the Baku Transparency Platform and calling for early submissions from Parties, resulting in 11 Parties plus the European Union submitting before the 31 December deadline. Leading by example, the Presidency also submitted its own BTR.

– Parties continued progress towards the goal of operationalizing Article 6, which would direct resources to the developing world and reduce the cost of implementing national climate plans. They reached consensus on Article 6.4 standards for trusted and transparent carbon markets and concluded negotiations on Article 6.8 which facilitates international cooperation through non-market approaches to implementing national climate plans and promoting sustainable development.

– During the World Leaders Climate Action Summit, 80 Heads of States, Governments and Vice-Presidents delivered official statements on how they are advancing the Paris Agreement and committing to climate action, addressing the need to raise ambition for mitigation and adaptation.

– Multilateral Development Banks (MDBs) announced projections for their contributions to climate action as $170 billion per year by 2030, with $120 for low- and middle-income countries.

– Positioned the Fund for responding to Loss and Damage to be ready to distribute funds in 2025 by securing contributor agreements and pledges as well as signing the host country agreement with the Philippines and hosting and trustee agreements with the World Bank. The largest contributions made during COP29 came from Australia and Sweden. Total pledges to the Fund to date have surpassed $730 million.

– Countries—including the US, China, EU, UAE, UK, Brazil, Canada, and Nigeria—came together and announced policies focused on reducing methane from organic waste.

– Ensured the participation of Small Island Developing States (SIDS) throughout the conference, creating opportunities for them to raise key priorities and concerns, such as accessibility of climate finance.

– Brought together over 1,000 private and philanthropic leaders from more than 70 countries at the Business Investment and Philanthropy Climate Platform (BIPCP) where investor groups with over $10 trillion in assets united to deploy private capital into climate markets.

– Pledges to climate finance projects and initiatives totaled $7.3 billion on Finance, Investment and Trade Day, with the largest support coming from the Asian Development Bank ($3.5 billion), the Azerbaijani banking sector ($1.2 billion), Sweden ($760 million) and Canada ($1.5 billion from the Canadian Government and $290 million from philanthropies) on investments in combating impacts of melting glaciers, green taxonomies, and climate action.

– Development finance institutions pledged to support the 10GW Lighthouse Initiative for renewable hydrogen projects in emerging markets and developing countries.

– Over 50 shipping industry actors agreed to accelerate zero and near-zero emission fuels by 2030, translating to at least 5 million tonnes of green hydrogen.

– As part of a $193 million package for various clean energy initiatives, the UK supported clean cooking for 10 million people across Sub-Saharan Africa, South Asia, and the Indo-Pacific to leave coal and wood cooking behind.

– Signified the role of cooperation and peace as indispensable to global climate action—with the COP Truce Appeal garnering support from 132 countries and 1,200+ organizations, as well as the Baku Call on Climate Action for Peace, Relief and Recovery being adopted, an initiative which will launch the Baku Climate and Peace Action Hub to address the urgent nexus of climate change, conflict, and humanitarian needs.

– With Germany’s pledge of $65.1 million and Ireland’s pledge of $13 million, contributions to the Adaptation Fund reached $133 million.

– Climate Investment Funds increased, collecting additional contributions from the US ($325 million), Germany ($220 million), and the UK ($211 million).

– 25 countries and the European Union indicated their intentions to put forward national climate plans that reflect no new unabated coal in their energy systems and issued a call to action for others to do the same.

– Mexico announced their commitment to net-zero emissions by 2050, meaning all G20 members have committed to a net-zero target.

– Local Communities and Indigenous Peoples: Established the Baku Workplan of the Local Communities and Indigenous Peoples Platform.

– UK government pledges £239 million ($299 million USD): The UK government has pledged over $299 million to tackle deforestation, including money to support the development of high-integrity forest carbon markets, for blended finance for sustainable forest enterprises, and for the UNFCCC to help countries protect forests.


https://commonslibrary.parliament.uk/halfway-to-2030-the-sustainable-development-goals/

2023 marks the half-way point to the deadline of achieving the Sustainable Development Goals (SDGs) by 2030.

As stated in the UN resolution marking their launch in 2015, the SDGs seek to galvanise a global effort to promote human development (PDF) and enable those “left behind” to “achieve their full human potential”.

The UN has warned progress on the goals has stalled, and, in some cases, went into reverse during the Covid-19 pandemic. The UN intends to re-invigorate international efforts with a SDG summit from 18 to 19 September 2023.

This Insight sets out progress since 2015 and the UK’s current and future plans for international development.

What are the SDGs?

The SDGs were launched in 2015 and apply to all UN members, including the United Kingdom.

The central aim is to “leave no one behind” and “reach the furthest behind first” (PDF). Someone might be “left behind” on the grounds of income, gender, disability, age, ethnicity, or where they live.

There are 17 SDGs (see below image), with 169 targets for meeting them. Goals to achieve by 2030 include:

  • Ending poverty in all its forms everywhere.
  • Ending hunger, achieving food security, and improving nutrition and sustainable agriculture.
  • Achieving gender equality and empowering all women and girls.

The 17 Sustainable Development Goals for 2030

There are 17 SDGs, including no poverty, gender equality and climate action.
Source: UK Government, SDG dataOpen Government licence v3.0

What progress has been made on the SDGs?

In July 2023, the UN published a progress report on the SDGs. It found that, of the 140 targets that had sufficient data to be evaluated, half had had “moderate or severe deviations” from the intended trajectory since 2015 and 30% had had no progress or had regressed. These included:

  • A 100% increase in the number of refugees from 2015 to 2022, reaching 35 million people (see chart below).
  • A “resurgence” in fossil-fuel subsidies in 2021, returning to 2014 levels (around US$732 billion).
  • A decline in international finance to developing countries to support clean energy research and production, from a post-2000 peak of US$26.4 billion in 2017 to US$10.8 billion in 2021.
  • 32% of young women (ages 15 to 24) not being in education, employment, or training in 2022, compared with 31% in 2015.
Several world regions have seen increases in the numbers of refugees since 2015, including North Africa and Western Asia
Source: UN Department of Economic and Social Affairs, SDG Indicators Database, retrieved 5 September 2023

In 2022, global regions with particular challenges in meeting the SDGs (PDF) were Sub-Saharan Africa, Oceania (excluding Australia and New Zealand) and parts of Asia:

  • The proportion of the employed population below the poverty line of US$1.90 per day was 6% globally, but 36% in Sub-Saharan Africa and 19% in Oceania (shown in the chart below).
  • The proportion of the world population undernourished was 10%, but 23% in Sub-Saharan Africa and 17% in southern Asia.
  • The under-five mortality rate was 38 per 1,000 live births globally in 2020, but 74 in Sub-Saharan Africa and 39 in Oceania.
In Sub-Saharan Africa a higher proportion of the employed population live below the international poverty line of US$1.90 per day. The proportion of the population undernourished is higher than the world average in Sub-Saharan Africa and central and southern Asia
Note: Grey lines indicate other regions of the world.
Source: UN Department of Economic and Social Affairs, SDG Indicators Database, retrieved 5 September 2023

UN calls for an “SDG stimulus”

The UN Secretary General, António Guterres, warns the SDGs will be missed. He argues there must be a “fundamental shift” in efforts at the September summit.

A successful summit, he states, rests on agreeing an “SDG stimulus” of US$500 billion a year (PDF), supported by the G20 group of countries.

First proposed by the Secretary General in October 2022, the stimulus would increase lending at low interest rates for countries with lower incomes, arrange debt relief, and reform the global financial architecture to increase the ability of these countries to access development finance.

At the G20 summit hosted by India in September, the group committed to “accelerate” implementation (PDF) of the SDGs.

UK aid and the SDGs

The UK is seen as one of the leaders in securing the commitment to “leave no-one behind” in 2015, with then Prime Minister David Cameron holding a high-level panel at the UN. The current lead for UK global efforts on the SDGs is the Foreign, Commonwealth and Development Office (FCDO).

The UK Government acknowledges that globally the SDGs are “drastically off track”, with African states and least-developed countries the most affected.

In October 2023, the former Minister for International Development, Vicky Ford MP, is expected to lead a debate in Westminster Hall on the SDGs.

2022 international development strategy

The UK’s international development strategy was launched in 2022 with four priorities, including empowering women and girls and supporting countries to grow sustainably.

Following publication, the strategy was criticised by Bond, the umbrella group for UK non-governmental organisations, for a “lack of clarity” on how UK aid would “leave no one behind” and advance the SDGs.

In July 2022, these comments were echoed by the Chair of the International Development Committee, Sarah Champion, who argued that “helping the poor increasingly seems to be seen as a by-product” of UK foreign policy.

By law, all UK aid is also required to reduce poverty and gender inequality.

The Government argues the strategy’s focus on economic growth, humanitarian aid and addressing the root causes of crises such as conflict and climate change means it is “closely aligned with the SDGs”.

Proposed international development white paper

Since taking office in October 2022, the new International Development Minister, Andrew Mitchell, has announced plans for a new international development white paper. This will set out the UK’s plans on international development to 2030, including how to get the SDGs “on track”, and explore “new solutions” to scale-up finance for development.

The Government plans to publish the paper at the UK’s global hunger summit in November 2023.

Change to aid spending

Having a smaller aid budget since 2020 has presented challenges for the UK’s work on the SDGs. Aid spending has fallen from a peak of £15.1 billion in 2019 to £12.8 billion in 2022 (of which a third in 2022 was spent in the UK on hosting refugees).

In its equalities assessments on the effects of the spending reductions, the FCDO found:

From 2024/25, FCDO aid spending is expected to rise but UK aid will not be restored to 0.7% of gross national income, as it was from 2013 to 2020.

Further reading


ROL AND THE SDGS

For many reading this, the Sustainable Development Goals (SDGs) require little introduction. Coming into force in January 2016, they represent the new, post-2015 development agenda: a set of 17 goals with 169 targets and further indicators to be pursued by every UN member state until 2030. One of the most significant developments is Goal 16 (peace, justice and strong governance) and nestled under this goal, target 16.3, which emphasises the promotion of the rule of law at national and international levels. Taking this target as a starting point, this article will review the relationship between the rule of law and the effective implementation of the SDG agenda.

-From the MDGs to the SDGs:     The new development framework has sought to improve on the Millennium Development Goals (MDGs) in breadth, complexity and applicability. The broadly accepted criticism that the 8 MDGs were too narrow in focus has been addressed with a much wider and holistic set of 17 new goals. They also represent a much more inclusive framework. Although the MDGs in theory applied to all, the targets primarily focused on the developing world, to be financed by wealthier member states. In contrast, the SDGs represent a more universally applicable set of goals, created from the largest UN consultative programme to date, and a number of the stated objectives apply beyond a specific sector to form fundamental building blocks for the agenda as a whole.

-The position of the Rule of Law within the SDGs:      IDLOs’ Director-General, Irene Khan, has previously called SDG 16 one such ‘crosscutting goal‘. But following a series of OWG meetings in July 2014, the final wording of Goal 16 stated not the ‘rule of law’ but rather ‘access to justice’. A report published by the Bingham Centre for the Rule of Law has explored the reasoning and impact of this decision. On the one hand, Goal 16’s ‘access to justice for all’ is an essential element in establishing and maintaining the rule of the law by empowering the most vulnerable groups in society to exercise their rights. However the rule of law doctrine is significantly wider than access to justice alone, incorporating additional elements such as the transparency and accountability of the law, the right to a fair trial, upholding human rights and judicial independence. A key concern is whether the placement of a narrower focus on ‘access to justice’ within the overall phrasing of Goal 16 and conversely, the incorporation of the broader concept of the ‘rule of law’ within a specific target, will in fact serve to confuse rather than clarify the importance of the doctrine as a tool for implementing the wider SDG framework.

-Challenges for SDG implementation:  where does the ROL currently falls short of supporting the SDGs?:  In early 2016, UN Secretary-General Ban Ki-moon warned of ‘the age of mega crises‘. One of the greatest challenges is the unprecedented refugee and migrant crisis in Europe. Such crises have placed overwhelming pressure on the democratic and legal systems of the developed world. The solutions found to current questions concerning the legal rights of asylum seekers, equal access to justice and Europe’s humanitarian values lie at the centre of both the crisis and the SDGs. Secondly, weaknesses in national and international tax law continue to persist giving rise to crippling global levels of corruption, bribery, fraud and tax evasion. Global Financial Integrity’s annual 2015 report estimates US$1.1 trillion was lost in illicit financial flows from developing countries in 2013. Yet despite the enormity of this problem, target 16.4 only speaks broadly of curbing ‘illicit financial and arms flows’. Many commentators have further noted that Addis Ababa Action Agenda on financing for the SDGs has failed to offer new sources of funding or transformative measures for the international finance system, setting aside proposals for a new international tax body. The future development of international and national tax legislation will be crucial in determining the realisation of the SDG agenda.

Looking forward: The role of the legal community: Despite these significant legal challenges to the effective implementation of the SDGs, the global legal community holds a unique position in the delivery of the new agenda through enforcement of the rule of law. This community extends to lawyers involved in advocacy, law reform, drafting of new legislation, legal education and in providing legal assistance and representation. Goal 5 (gender equality), for example, will be facilitated through the abolition of all forms of gender-based discriminatory legislation and practices, and the implementation of effective legal systems enabling the rights of women and girls to be heard and enforced. Goal 12 (responsible consumption) and Goal 7 (affordable and clean energy) similarly require internationally agreed legal frameworks which further provide developing countries with the legal tools with which to implement them.

Therefore despite the somewhat secondary nature of inclusion of the ‘rule of law’ under target 16.3, and the challenges posed by current weaknesses in international and national law, the promotion of the rule of law at a global level is the essential thread underpinning the achievability of the 15 year programme. As we look forward, the upcoming launch of A4ID’s legal guide to the goals will represent a hugely significant step towards positively harnessing the power of the law towards the delivery of the new development agenda.

 

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morocco.eu.fta. invalidated by western sahara dispute (opinion says)

Front Polisario asks EU court to stop renegotiation of EU-Morocco fisheries deal

(Case T-376/18)  (2018/C 319/20)Parties
Applicant: Front populaire pour la libération de la Saguia el-Hamra et Rio de oro (Front Polisario) (represented by: G. Devers, lawyer)
Defendant: Council of the European Union

Form of order sought: The applicant claims that the General Court should:        Declare its action admissible;  Annul the contested decision;    Order the Council to pay the costs. 
 
Pleas in law and main arguments
 
In support of the action against the Council’s decision of 16 April 2018, authorising the Commission to open negotiations, on behalf of the European Union, for the purposes of amending the Fisheries Partnership Agreement and concluding a Protocol with the Kingdom of Morocco (decision not published in the Official Journal of the European Union), the applicant relies on ten pleas in law. 

  1. First plea in law, alleging a lack of authority on the part of the Council to adopt the contested decision, in so far as the European Union and the Kingdom of Morocco lack competence to negotiate international agreements including Western Sahara, for and on behalf of the people of that territory as represented by the Front Polisario. 
  1. Second plea in law, alleging a failure to fulfil the obligation to examine all the relevant aspects of the present case, in so far as, when adopting the contested decision, the Council failed to take account of the case-law of the Court on the question of Western Sahara. 
  1. Third plea in law, alleging a failure to fulfil the obligation to examine the question of respect for fundamental rights and international humanitarian law, in so far as it is apparent from the contested decision that the Council failed to consider the question of respect for fundamental rights and international humanitarian law. 
  1. Fourth plea in law, alleging a breach of the rights of the defence in so far as the Council failed to engage in any discussion with the Front Polisario, the sole representative of the people of Western Sahara, prior to the adoption of the contested decision. 
  1. Fifth plea in law, alleging a breach, on the part of the Council, of its obligation to execute the judgments of the Court, in so far as the contested decision disregards the grounds of the Court’s judgments in Cases C-104/16 P and C-266/16. 
  1. Sixth plea in law, alleging a breach of the essential principles and values guiding the Union’s action on the international stage, since (i) the decision denies the existence of the people of Western Sahara in substituting the words ‘populations concerned’ therefor; and (ii) it authorises the opening of negotiations with the Kingdom of Morocco in the context of the latter’s annexationist policy with regard to Western Sahara and the systematic breaches of fundamental rights that maintaining such a policy entails. 
  1. Seventh plea in law, alleging a breach of the right to self-determination, since (i) the decision denies the existence of the people of Western Sahara with regard to the right to self-determination and upsets the national unity of that people; and (ii) it authorises the opening of negotiations with the Kingdom of Morocco in breach of the separate and distinct status of Western Sahara and the permanent sovereignty of the people of that territory over its natural resources. 
  1. Eighth plea in law, alleging a breach of the principle of the relative effect of treaties, in so far as the contested decision denies the people of Western Sahara, represented by the Front Polisario, standing as a third party in EU-Morocco relations. 
  1. Ninth plea in law, alleging a breach of international humanitarian law and international criminal law since (i) the negotiations, authorised by the contested decision, are being conducted in the context of the Kingdom of Morocco’s annexationist policy with regard to Western Sahara; and (ii) by using the words ‘populations concerned’, that decision endorses the illegal transfer of Moroccan colonists to occupied Sahraouian territory. 
  1. Tenth plea in law, alleging breach of the Union’s obligation not to recognise illegal situations since, in authorising negotiations with the Kingdom of Morocco with regard to Western Sahara, the contested decision ratifies the serious breaches of international law committed by the Moroccan occupying forces against the people of Western Sahara.

EU Commission seeks amendment to fisheries partnership with Morocco

(March 21, 2018, 15:15 GMT | Official Statement) — MLex Summary: The European Commission has proposed changes to the EU-Morocco fisheries partnership, following an EU Court of Justice ruling that said the existing agreement isn’t applicable to Western Sahara and the waters adjacent to it. The proposals would need to be approved by EU governments. 

COLLEGE MEETING: The Commission Proposes to Amend the EU-Morocco Fisheries Partnership Agreement and Renew Its Protocol

Following the ruling of the Court of Justice of the European Union on February 27, the Commission today adopted a proposal for a Council decision authorizing it to negotiate with Morocco to amend the current EU-Morocco Fisheries Partnership Agreement and to renew the protocol.

The aim is to maintain and further develop the fisheries partnership between the EU and Morocco by concluding an agreement and protocol that are environmentally sustainable, economically viable, and fully compliant with international and European law. Morocco is a close partner of the EU, benefiting from “advanced status” under the European Neighbourhood Policy and the EU-Morocco Association Agreement.

Today’s proposal seeks to improve fisheries governance, notably by strengthening the monitoring, control, and surveillance of fishing activities in the region.

Continuity of the agreement will benefit both parties:

  • For Morocco: It provides support for its “Halieutis” strategy aimed at the sustainable development of the fisheries sector, thanks to the significant financial contribution provided under the protocol.
  • For the EU operators: Including artisanal fishers from several Member States, it offers access to the fishing opportunities provided by the amended agreement and renewed protocol.

The EU proposal includes an extension of the agreement to the Western Sahara under certain conditions. The proposal and annex are available online



February 27, 2018, 09:06 GMT | Official Statement) — MLex Summary: The Court of Justice of the EU ruled that Western Sahara and the waters surrounding it aren’t included in the Fisheries Agreement between the bloc and Morocco. The court said that the deal only applies to the territory of Morocco, which doesn’t include Western Sahara under international law. Morocco claims Western Sahara is part of its territory.
Court of Justice of the European Union   PRESS RELEASE No 21/18    Luxembourg, 27 February 2018    Judgment in Case C-266/16
The Queen, on the application of Western Sahara Campaign UK v Commissioners for Her Majesty’s Revenue and Customs and Secretary of State for Environment, Food and Rural Affairs:

The Fisheries Agreement concluded between the EU and Morocco is valid in so far as it is not applicable to Western Sahara and to its adjacent waters Western Sahara is a territory in North-West Africa, bordered by Morocco to the north, Algeria to the north-east, Mauritania to the east and south and the Atlantic to the west. Currently, the greater part of Western Sahara is occupied by Morocco, which considers it to be an integral part of its territory. A smaller part of that territory, in the east, is controlled by the Front Polisario, a movement which seeks to achieve the independence of Western Sahara.
The EU and Morocco successively concluded an association agreement in 1996, a partnership agreement in the fisheries sector (‘the Fisheries Agreement’)1 in 2006 and a liberalisation agreement with respect to agricultural and fisheries products in 2012. The Fisheries Agreement is supplemented by a protocol setting out the fishing opportunities which it lays down, and expires in July 2018.   By judgment of 21 December 2016,3 the Court of Justice, hearing an appeal in the dispute between the Front Polisario and the Council of the European Union and the European Commission, held that the association agreement and the partnership agreement concluded between the EU and Morocco had to be interpreted, in accordance with international law, as meaning that they were not applicable to the territory of Western Sahara. That case did not, however concern the Fisheries Agreement, and consequently the Court gave no ruling on the validity of that agreement in its judgment. 
The Western Sahara Campaign (WSC) is an independent voluntary organisation whose aim is to support the recognition of the right of the people of Western Sahara to self-determination. WSC claims, before the High Court of Justice (England and Wales), Queen’s Bench Division (Administrative Court) that the Fisheries Agreement and the acts approving and implementing that agreement5 are invalid in so far as that agreement and those acts apply to the waters adjacent to the territory of Western Sahara. WSC consequently considers that the United Kingdom authorities are acting unlawfully in providing for implementation of that agreement and, in particular, issuing licences to fish in the waters at issue.   In those circumstances, the High Court of Justice sought to ascertain from the Court of Justice, inter alia, whether the Fisheries Agreement was valid under EU law. This is the first time that a request has been made under the preliminary ruling procedure for a review of validity formally covering international agreements concluded by the EU.  In today’s judgment, the Court holds, in the first place, that it has jurisdiction to assess the validity of acts approving the conclusion of international agreements concluded by the EU and, in that context, to assess whether such agreements are compatible with the treaties and the rules of international law which bind the EU. The Court examines, in the second place, the validity of the Fisheries Agreement. It notes that the British court seeks to determine whether the opportunity to exploit the natural resources in the waters adjacent to the territory of Western Sahara is compatible with EU law and international law. Such a question presupposes that those waters are included with the territorial scope of the Fisheries Agreement. Therefore, the Court first establishes the validity of that premiss. In that regard, the Court notes, first of all, that the Fisheries Agreement is applicable to the “territory of Morocco”, an expression equivalent to the concept of “territory of the Kingdom of Morocco” in the Association Agreement. As the Court has previously held in its judgment of 21 December 2016, that concept itself refers to the geographical area over which the Kingdom of Morocco exercises its sovereign powers under international law, to the exclusion of any other territory, such as that of Western Sahara. In those circumstances, if the territory of Western Sahara were to be included within the scope of the Fisheries Agreement, that would be contrary to certain rules of general international law that are applicable in relations between the EU and Kingdom of Morocco, inter alia the principle of self-determination.  The Court notes, next, that the Fisheries Agreement is applicable to “waters falling within the sovereignty or jurisdiction” of the Kingdom of Morocco. In accordance with the UN Convention on the Law of the Sea,6 the waters over which a coastal State is entitled to exercise sovereignty or jurisdiction are limited exclusively to the waters adjacent to its territory and forming part of its territorial sea or of its exclusive economic zone. The Court therefore holds that, taking account of the fact that the territory of Western Sahara does not form part of the territory of the Kingdom of Morocco, the waters adjacent to the territory of Western Sahara are not part of the Moroccan fishing zone referred to in the Fisheries Agreement.   Lastly, the Court examines the territorial scope of the Protocol to the Fisheries Agreement. Although that Protocol does not contain any specific provisions on that subject, the Court states that several of its provisions use the expression “Moroccan fishing zone”. That expression is the same as that to be found in the Fisheries Agreement, which defines it as “waters falling within the sovereignty or jurisdiction of the Kingdom of Morocco”. The Court concludes that the “Moroccan fishing zone” under the Protocol does not include the waters adjacent to the territory of Western Sahara. The Court therefore holds that, since neither the Fisheries Agreement nor the Protocol thereto are applicable to the waters adjacent to the territory of Western Sahara, the EU acts relating to their conclusion and implementation are valid.   NOTE: A reference for a preliminary ruling allows the courts and tribunals of the Member States, in disputes which have been brought before them, to refer questions to the Court of Justice about the interpretation of European Union law or the validity of a European Union act. The Court of Justice does not decide the dispute itself. It is for the national court or tribunal to dispose of the case in accordance with the Court’s decision, which is similarly binding on other national courts or tribunals before which a similar issue is raised.  
1 OJ 2006 L 141, p. 4. The conclusion of that agreement was approved by Council Regulation (EC) No 764/2006 of 22 May 2006 (JO 2006, L 141, p. 1).
2 OJ 2013 L 328, p. 2. The conclusion of that protocol was approved by Council Decision 2013/785/EU of 16 December 2013 (JO 2013, L 349, p. 1).
3 Case: C-104/16 P Council v Front Polisario, see Press Release No 146/16.
4 The Front Polisario is however challenging the legality of the Fisheries Agreement Protocol before the General Court (Case T-180/14). The General Court has stayed proceedings in that case until the Court has given judgment in the WSC case.
5 In addition to the acts referred to in footnote 1 and 2, WSC also disputes the validity of Council Regulation (EU) No 1270/2013 of 15 November 2013 on the allocation of fishing opportunities under the 2013 Protocol (OJ 2013 L 328, p. 40)
6 The United Nations Convention on the Law of the Sea, concluded at Montego Bay on 10 December 1982 (United Nations Treaty Series, Vol. 1833, 1834 and 1835, p. 3), entered into force on 16 November 1994. Its conclusion was approved on behalf of the Community by Council Decision 98/392/EC of 23 March 1998 (OJ 1998 L 179, p. 1)


Western Sahara dispute invalidates EU-Morocco fisheries deal, EU legal opinion says

The 2012 agreement cannot represent the population in Western Sahara, which has no government, Advocate General Melchior Wathelet said in his non-binding opinion, published today (see here). Morocco claims sovereignty over the territory and occupies large parts of it, including almost all of the coast, but its claims aren’t widely recognized.  UK-based activist group Western Sahara Campaign, or WSC, brought the case to the EU Court of Justice via the UK courts, seeking annulment of the Fisheries Partnership Agreement between the EU and Morocco because it included Western Sahara.  In particular, WSC took issue with the deal granting preferential tariff treatment to products originating in Western Sahara that are certified as products originating in Morocco. It also disputes the UK authorities’ right to issue licenses to fish in the waters adjacent to Western Sahara.   In today’s opinion, Wathelet said the people of Western Sahara had not freely expressed a will to join the pact, nor did they benefit from its financial gains.   Wathelet noted that catches in the waters adjacent to Western Sahara accounted for a large portion of fishing included in the pact, meaning it should rightly “benefit almost exclusively the people of Western Sahara.” However, the money went to Morocco, whose government has almost full discretion over its use.   The Advocate General said the agreement didn’t contain “the necessary legal safeguards” to ensure the fishing rights are “for the benefit of the people of Western Sahara.” He therefore recommended that the court declare the agreement invalid.

— Previous challenge —
 
In 1996 the EU and Morocco concluded an association agreement, which liberalized areas of bilateral trade. In 2006 they signed a partnership agreement in the fisheries sector, and in 2012 a liberalization agreement on agricultural and fishery products.  
Today’s case follows an unsuccessful challenge launched by the Front Polisario in 2013, which seeks independence for Western Sahara, against the EU’s trade deal with Morocco. EU judges upheld the agreement in December 2016, ruling that the deal excluded Western Sahara (see here). Separately, the European Commission has this week requested permission from EU governments to open negotiations with Morocco to update rules linked to the implementation of the fisheries deal (see here).   This is a routine matter, as the implementation protocol is due to expire in July 2018. Nonetheless, the protocol seeks to ensure that the agreement’s principles and standards are in line with international and EU law.  The court’s reference for today’s case is C-266/16

 
 
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morocco.eu.fta VALID

EU-Morocco trade deal is valid, EU’s highest court rules

 
The Association and Liberalisation Agreements concluded between the EU and Morocco are not applicable to Western Sahara 
The Court therefore sets aside the judgment of the General Court which had found the opposite to be the case and dismisses the action for annulment brought by the Front Polisario against the Council’s decision to conclude the Liberalisation Agreement.
 
Western Sahara is a territory in North-West Africa, bordered by Morocco to the north, Algeria to the north-east, Mauritania to the east and south and the Atlantic to the west. Currently, the largest part of Western Sahara is controlled by Morocco. 
A smaller part of that territory, in the east, is controlled by the Front Polisario, a movement which seeks independence for Western Sahara and whose legitimacy has been recognized by the United Nations. In 2012, the EU and Morocco concluded an agreement providing for reciprocal liberalisation measures on agricultural products, processed agricultural products and fish and fishery products (the ‘Liberalisation Agreement’). 
That agreement, the territorial scope of which depends on that of the EU-Morocco Association Agreement, was formally concluded by the EU on the basis of a Council decision. The Front Polisario brought an action before the General Court seeking the annulment of that decision. By its judgment, delivered on 10 December 20153 , the General Court annulled the decision, having held, first of all, that the Association and Liberalisation Agreements were applicable ‘to the territory of the Kingdom of Morocco’ and that that expression was to be understood, in the absence of a stipulation to the contrary, as encompassing Western Sahara. 
The General Court then held that, in view of the application of those agreements to Western Sahara, Front Polisario was concerned by the Council’s decision and therefore had standing to request the annulment of the decision.
 
Finally, the General Court held that the Council had failed to fulfill its obligation to examine, before the conclusion of the Liberalisation Agreement, whether there was any evidence of the exploitation of the natural resources of the territory of Western Sahara under Moroccan control likely to be to the detriment of its inhabitants and to infringe their fundamental rights. Dissatisfied with that judgment, the Council brought an action before the Court of Justice seeking its annulment. In today’s judgment, the Court, giving judgment following an expedited procedure at the request of the Council, upholds the appeal and sets aside the judgment of the General Court.
The Court observes that, in determining the territorial scope of the Liberalisation Agreement, whose terms do not at any point refer to Western Sahara, the General Court failed to take account of all the rules of international law applicable to relations between the EU and Morocco, as required by the 1969 Vienna Convention on the Law of Treaties4 .  
In that regard, it notes first of all that, in view of the separate and distinct status guaranteed to the territory of Western Sahara under the Charter of the United Nations and the principle of self-determination of peoples, it cannot be held that the term ‘territory of the Kingdom of Morocco’, which defines the territorial scope of the Association and Liberalisation Agreements, encompasses Western Sahara and, therefore, that those agreements are applicable to that territory.  
The General Court thus failed to draw the consequences of the status of Western Sahara under international law. Secondly, it is clear from international practice that, where a treaty is intended to apply not only to the sovereign territory of a State but also beyond it, that treaty must provide therefor expressly, whether it is a territory under the jurisdiction of that State or in any territory for whose international relations the State in question is responsible.  
That rule therefore also precludes the application of the Association and Liberalisation Agreements to Western Sahara. Finally, after recalling the principle of the relative effect of treaties under which a treaty must neither impose any obligations or confer any rights on third States without their consent, the Court states that, in view of the Advisory Opinion on Western Sahara handed down in 1975 by the International Court of Justice at the request of the United Nations General Assembly5 , the people of that territory must be regarded as a third party which may be affected by the implementation of the Liberalisation Agreement. In the present case, it is not apparent that that people consented to the agreement being applied to Western Sahara.
 
As to the fact that certain clauses in the Association and Liberalisation Agreements were applied ‘de facto’ in some cases to products originating in Western Sahara, the Court finds that it has not been established that such a practice is the result of an agreement between the parties to amend the interpretation of the territorial scope of those agreements.
 
Moreover, a purported intention to that effect by the EU entails conceding that it intended to implement the agreements in a manner incompatible with the principles of self-determination and of the relative effect of treaties as well as the requirement of good faith under international law. Having concluded that the Liberalisation Agreement does not apply to the territory of Western Sahara, the Court sets aside the judgment of the General Court which had reached the opposite conclusion and decides to adjudicate itself on the action brought by the Front Polisario.
 
In that regard, it notes that, since the Liberalisation Agreement does not apply to Western Sahara, the Front Polisario is not concerned by the decision of the Council to conclude that agreement. The Court therefore rejects the Front Polisario’s action on the ground of lack of standing


September 13, 2016, 09:18 GMT | Insight) — A bilateral trade agreement between the European Union and Morocco shouldn’t have been voided by EU judges, says a legal opinion prepared for the bloc’s highest court.  Their decision to scrap the 2012 accord should be reversed because they wrongly considered the contested region of Western Sahara to be part of Morocco’s territory, says today’s recommendation from Advocate General Melchior Wathelet.   “International law does not permit the extension of the scope of a bilateral treaty to a territory which constitutes a third party in relation to the other parties to that treaty,” Wathelet says in his opinion (see here). “Western Sahara specifically constitutes such a territory with respect to the EU and Morocco.”
 
The EU-Morocco trade deal cuts 55 percent of tariffs on imports of Moroccan agricultural and fisheries products. It also phases out 70 percent of duties on the EU’s exports of the same goods within 10 years.  But the Polisario Front, a liberation movement aiming to end Moroccan presence in Western Sahara, challenged the agreement at the EU’s lower-tier General Court in Luxembourg.
 
The group argued that the EU should have made sure that the trade accord didn’t violate the right of the Saharawis — people of the Western Sahara — to make decisions about their own farming and fishing resources.  The General Court annulled the trade pact last December, saying the EU had failed to ensure that the rights of the Saharawis were safeguarded and that the region should have been explicitly excluded from the trade deal.   The EU appealed the ruling to the upper-tier Court of Justice earlier this year.   In his opinion today, Wathelet says Western Sahara isn’t part of Morocco, which means the trade accord doesn’t apply to the disputed region.  “The European Union and its member states have never recognized the Western Sahara is part of Morocco, or that the latter has sovereignty over that territory,” he writes.   The advocate general is a member of the court who writes nonbinding recommendations on cases before the bench


September 6, 2017, 15:53 GMT | Insight) — A fisheries deal between the EU and Morocco breaks international laws because it includes occupied Western Sahara without the consent of its people, lobby group Western Sahara Campaign UK told the EU’s highest court today.  The group has asked the EU Court of Justice to declare the pact invalid, saying Morocco doesn’t represent the population in Western Sahara, which has no government.  Today’s case follows a 2013 challenge by Front Polisario, which seeks independence for Western Sahara, against the EU’s trade deal with Morocco. Judges upheld the agreement last December, ruling that the deal excluded Western Sahara.    Much of Western Sahara is under Moroccan military occupation and the country trades the goods it obtains from the region.
 
Western Sahara Campaign, represented by Kieron Beal, asked the EU Court of Justice to rule on the legality of the Fisheries Partnership Agreement. The 2013 deal lets European companies fish in Moroccan and the Western Saharan waters under Morocco’s jurisdiction.  
Beal said that “the question” is whether Western Sahara is considered “to be in the jurisdiction of Morocco.”    
“If an EU legal measure was to recognize Morocco’s jurisdiction over Western Sahara,” Beal said, it would “in effect” be an “illegal act.” 
 “The mere fact of the practical administration of Morocco provides no basis” for determining the future of “another entity’s natural resources,” he said.  When striking deals with third countries, the EU must comply with international laws, Beal said. “It’s therefore wrong to suggest that the EU institutions can simply accept Morocco’s statement of its own jurisdiction,” he added. “That can’t be right.”  “Nowhere do these EU measures face up to the fact Western Sahara isn’t part of Morocco,” Beal told the court in Luxembourg. “There’s no mention anywhere of it at all, they don’t demarcate the territorial Western Sahara” or include “provisions for transferring benefits to its people.”  Furthermore, the “EU cannot suggest” that the fisheries pact benefits the people in the region “in accordance with their wishes,” he said, because there was “no satisfactory evidence” and “no appraisal has been carried out” by the bloc. 

— Fishing permits —
 
Jean-Francois Bellis, representing Comader, a Moroccan agricultural and development confederation, said the fisheries agreement is “clearly meant to apply to the waters of Western Sahara.” In fact, he said, “fishing permits have been granted [based] on the agreement to European vessels.”   “No matter how the relationship between the EU and Morocco is viewed, there’s nothing in international law prohibiting it to enter into such an agreement,” Bellis told judges.   The accord “serves to benefit the population of Western Sahara” and “the fact sovereignty over a territory is disputed shouldn’t result in depriving the people from any advantages that arise from international cooperation,” he added.  The Western Sahara Campaign argues that the pact exploits and plunders the area’s natural resources. But Bellis said the accord upholds standards in conservation, promotes responsible fishing and has led to an increase in jobs stemming from EU support.

— Call for dismissal —
 
Fernando Castillo de la Torre argued on behalf of the European Commission that Western Sahara Campaign was effectively saying “no one could conclude an agreement for Western Sahara, full stop.” But this accord “is precisely the agreement which provides for sustainable fishery of such resources” and, “in the absence” of such a pact, “the situation could be far worse.” Castillo de la Torre acknowledged that the question of how to treat Western Sahara was controversial and that rules on how to proceed weren’t clear. But the commission had “done what we think is in the best interest of the people in that area,” he said.  
The case should be dismissed, Castillo de la Torre argued, because the court “can only annul if the rules were a clear-cut breach of international law, which isn’t the case here.”On behalf of EU governments, lawyer Alvaro De Elera-San Miguel Hurtado said Western Sahara Campaign had raised points of international law, not EU law. The EU court can only rule on European law, so the lobby’s case had no standing, he said.  
Western Sahara Campaign first challenged the agreement in the UK’s national court, which referred the case to Luxembourg.  
The advocate general’s legal opinion on the case will be presented on Dec. 15.  The court’s reference for the case is C-266/16.

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morocco.eu fta invalid

MLEX.summary

Judgment of the Court (Eighth Chamber)    10 December 2015

“External relations – Agreement in the form of an exchange of letters between the Union and Morocco – Reciprocal liberalization of agricultural products, processed agricultural products, fish, and fisheries products – Application of the agreement to Western Sahara – Front Polisario – Action for annulment – Legal capacity to act – Direct and individual concern – Admissibility – Compliance with international law – Obligation to state reasons – Rights of the defense.”


Case T-512/12:

Front Polisario (Popular Front for the Liberation of Saguia el Hamra and Rio de Oro), represented by lawyers, acting as the applicant,
versus 
Council of the European Union, represented by agents, acting as the defendant,
supported by the European Commission, represented initially by legal agents, acting as an intervening party.


Object of the Case

A request for the annulment of the Council’s Decision 2012/497/EU of 8 March 2012 concerning the conclusion of the agreement in the form of an exchange of letters between the European Union and the Kingdom of Morocco. The agreement pertains to reciprocal liberalization measures regarding agricultural products, processed agricultural products, fish, and fisheries products, replacing protocols and annexes of the Euro-Mediterranean agreement establishing an association between the European Communities and the Kingdom of Morocco.


Background of the Case

1. International Status of Western Sahara

Western Sahara is a territory in northwest Africa, bordered by Morocco to the north, Algeria to the northeast, and Mauritania to the east and south, with a coastline along the Atlantic Ocean. Initially colonized by Spain after the Berlin Conference in 1884, it became a Spanish province post-World War II. Upon Moroccan independence in 1956, Morocco claimed Western Sahara as part of its territory.


2. Developments in International Recognition

  • 1960: The United Nations adopted Resolution 1514 (XV), calling for the independence of colonized territories.
  • 1963: Western Sahara was listed as a non-self-governing territory under Article 73 of the UN Charter.
  • 1974: Spain proposed a UN-supervised referendum in Western Sahara for self-determination.
  • 1975: The International Court of Justice issued an advisory opinion, rejecting claims that Western Sahara was a “terra nullius” (land belonging to no one) before Spanish colonization. The ICJ acknowledged legal ties with Morocco and Mauritania but affirmed the right of the people to self-determination.

3. Conflict and Agreements

  • 1975: Morocco organized a “Green March,” involving 350,000 civilians into Western Sahara, asserting its claim. The UN Security Council denounced this action.
  • 1976: Spain officially withdrew from the region, transferring administration to Morocco and Mauritania. Armed conflict ensued with the Front Polisario, a liberation movement established in 1973.
  • 1979: Mauritania withdrew following a peace agreement with Polisario. Morocco then occupied the vacated territory.

4. Present Day

Most of Western Sahara is under Moroccan control, separated by a sand wall. A smaller region is governed by Polisario, with refugees residing in Algerian-administered camps.


5. Decision and its Background

  • 1996: The Euro-Mediterranean agreement was concluded between the EU and Morocco to establish an association, covering aspects like trade liberalization and economic cooperation.
  • 2012: The Council approved an updated agreement involving agricultural and fisheries products, replacing previous protocols and annexes.

The agreement was challenged by the Front Polisario, asserting its application extended to Western Sahara, a non-self-governing territory under international law.


Procedure and Arguments

1. Capacity of the Front Polisario to Act

The Court examined whether the Front Polisario had legal standing under EU law.

  • Applicant’s Argument: The Front Polisario, recognized as a liberation movement by the UN, represents the Sahrawi people and is entitled to challenge EU decisions impacting the territory.
  • Council’s Argument: Polisario lacks legal capacity as it is not a state or an established legal entity under international law.

2. Admissibility of the Action

The Court assessed whether the Front Polisario was directly and individually concerned by the Council’s decision.

  • Applicant’s Claim: The agreement affects Western Sahara’s resources and population directly.
  • Council’s Position: The decision targeted only Morocco and did not directly involve Western Sahara or the applicant.

3. Substance of the Challenge

  • Polisario’s Argument: The agreement violates international law by applying to Western Sahara without the consent of its people, as mandated by the principle of self-determination.
  • Council’s Defense: The agreement adheres to the EU-Morocco framework, and any application to Western Sahara falls under Morocco’s administrative responsibility.

Judgment

1. Legal Capacity of Polisario

The Court ruled that while Polisario represents the Sahrawi people in international forums, it does not constitute a legal entity under EU law capable of initiating proceedings.


2. Direct and Individual Concern

  • Ruling: Polisario demonstrated sufficient direct and individual concern regarding the decision’s application to Western Sahara, enabling the Court to consider the case.

3. International Law Considerations

The Court analyzed the decision’s compatibility with international law, particularly the obligations of EU institutions to respect the self-determination of non-self-governing territories.

  • Outcome: The application of the agreement to Western Sahara was deemed inconsistent with these principles.

Conclusion and Orders

The Court annulled the Council’s decision insofar as it applied to Western Sahara, citing violations of international law and the EU’s obligations under its treaties.

  • Costs: The Council and the European Commission were ordered to bear their legal costs, with no additional costs imposed on Polisario


External relations — Agreement in the form of an Exchange of Letters between the European Union and Morocco — Reciprocal liberalisation of agricultural products, processed agricultural products, fish and fishery products — Application of the Agreement to the territory of Western Sahara — Front Polisario — Action for annulment — Capacity to bring proceedings — Direct and individual concern — Admissibility — Compliance with international law — Obligation to state reasons — Rights of the defence)

Parties

Applicant: Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) (represented initially by C.-E. Hafiz and G. Devers, and subsequently by G. Devers, lawyers)

Defendant: Council of the European Union (represented by: S. Kyriakopoulou, A. Westerhof Löfflerová and N. Rouam, acting as Agents)

Intervener in support of the defendant: European Commission (represented initially by F. Castillo de la Torre, E. Paasivirta and D. Stefanov, and subsequently by F. Castillo de la Torre and E. Paasivirta, acting as Agents)

Re: Action for annulment of Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2012 L 241, p. 2).

Operative part of the judgment

The Court: Annuls Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part, in so far as it approves the application of the Agreement to the territory of Western Sahara;Orders the Council of the European Union and the European Commission to each bear their own costs and to pay those incurred by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario).


JUDGMENT OF THE GENERAL COURT (Eighth Chamber)   10 December 2015 (*)

(External relations — Agreement in the form of an Exchange of Letters between the European Union and Morocco — Reciprocal liberalisation of agricultural products, processed agricultural products, fish and fishery products — Application of the agreement to Western Sahara — Front Polisario — Action for annulment — Capacity to bring legal proceedings — Direct and individual concern — Admissibility — Conformity with international law — Obligation to state reasons — Rights of defence)

Case T‑512/12

Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario), represented initially by C.-E. Hafiz and G. Devers, and subsequently by G. Devers, lawyers,

applicant,

v

Council of the European Union, represented by S. Kyriakopoulou, Á. de Elera-San Miguel Hurtado, A. Westerhof Löfflerová and N. Rouam, acting as Agents,

defendant,

supported by

European Commission, represented initially by F. Castillo de la Torre, E. Paasivirta and D. Stefanov, and subsequently by F. Castillo de la Torre and E. Paasivirta, acting as Agents,

intervener,

ACTION for annulment of Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2012 L 241, p. 2),

THE GENERAL COURT (Eighth Chamber),

composed of D. Gratsias (Rapporteur), President, M. Kancheva and C. Wetter, Judges,

Registrar: S. Bukšek Tomac, Administrator,

having regard to the written procedure and further to the hearing on 16 June 2015,

gives the following

Judgment

 Legal Background

 The international status of Western Sahara

1        Western Sahara is a territory in north-west Africa bordered by Morocco to the north, Algeria to the north-east, Mauritania to the east and south, while its west coast faces the Atlantic. It was colonised by the Kingdom of Spain, following the Berlin (Germany) Conference of 1884 and, from the Second World War, it was a province of Spain. After its independence in 1956, the Kingdom of Morocco demanded the ‘liberation’ of Western Sahara, considering that that territory belonged to it.

2        On 14 December 1960, the General Assembly of the United Nations Organisation (‘the UN’) adopted Resolution 1514 (XV) on the Granting of Independence to Colonial Countries and Peoples.

3        In 1963, following the transmission of information by the Kingdom of Spain pursuant to Article 73(e) of the Charter of the United Nations, the UN added Western Sahara to its list of non-self-governing territories. It is still on that list.

4        On 20 December 1966, the UN General Assembly adopted Resolution 2229 (XXI) on the Question of Ifni and the Spanish Sahara, reaffirming the ‘inalienable right of the peoples … of the Spanish Sahara to self-determination’. It requested the Kingdom of Spain, as the administering power, to ‘determine, at the earliest possible date, in conformity with the aspirations of the indigenous people of Spanish Sahara and in consultation with the Governments of Mauritania and Morocco and any other interested party, the procedures for the holding of a referendum under [UN] auspices with a view to enabling the indigenous population of the Territory to exercise freely its right to self-determination’.

5        The applicant, the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario) was created on 10 May 1973. According to Article 1 of its constituting document, drawn up at its 13th Congress in December 2011, it is ‘a national liberation movement, the fruit of the long resistance of the Sahrawi people against the various forms of foreign occupation’.

6        On 20 August 1974, the Kingdom of Spain informed the UN that it proposed to organise a referendum in Western Sahara under UN auspices.

7        By Resolution 3292 (XXIX) on the Question of the Spanish Sahara, adopted on 13 December 1974, the UN General Assembly decided to request the International Court of Justice for an Advisory Opinion on whether Western Sahara (Rio de Oro and Sakiet El Hamra) was, at the time of its colonisation by the Kingdom of Spain, a territory belonging to no one (terra nullius). If the answer to the first question was in the negative, it also requested the International Court of Justice to rule on the issue of the legal ties between Western Sahara and the Kingdom of Morocco and the Mauritanian entity. Furthermore, the UN General Assembly called upon the Kingdom of Spain, which it treated as the administering power, to postpone the referendum that it was planning to organise in Western Sahara until the General Assembly had decided on the policy to be pursued in order to accelerate the decolonisation process in the territory. It also requested the special committee in charge of studying the situation with regard to the implementation of the declaration mentioned in paragraph 2 above ‘to keep the situation in the [t]erritory under review, including the sending of a visiting mission to the [t]erritory’.

8        On 16 October 1975, the International Court of Justice handed down the Advisory Opinion requested (Western Sahara, Advisory Opinion, ICJ Reports 1975, p. 12). According to that Opinion, at the time of colonisation by the Kingdom of Spain, Western Sahara (Rio de Oro and Sakiet El Hamra) was not a territory belonging to no one (terra nullius). The International Court of Justice also observed in its Opinion that Western Sahara had legal ties with the Kingdom of Morocco and the Mauritanian entity, but that the materials and information presented to it did not establish any tie of territorial sovereignty between the territory of Western Sahara and the Kingdom of Morocco or the Mauritanian entity. Thus, it stated, in paragraph 162 of its Opinion, that it had not found legal ties of such a nature as might affect the application of UN General Assembly Resolution 1514 (XV) of 14 December 1960 on the Granting of Independence to Colonial Countries and Peoples (see paragraph 2 above) as regards the decolonisation of Western Sahara and, in particular, the application of the principle of self-determination through the free and genuine expression of the will of the peoples of the territory.

9        In the autumn of 1975 the situation in Western Sahara deteriorated. In a speech delivered the same day as the publication of the abovementioned Opinion of the International Court of Justice, the King of Morocco, who took the view that ‘everyone’ had recognised that Western Sahara belonged to Morocco and that ‘it only remained for the Moroccans to occupy [their] territory’, called for the organisation of a ‘peaceful march’ towards Western Sahara with the participation of 350 000 persons.

10      The UN Security Council (‘the Security Council’) called on the parties concerned and the interested parties to show restraint and moderation and expressed its concern with regard to the serious situation in the region with three resolutions on Western Sahara, namely Resolutions 377 (1975) of 22 October 1975, 379 (1975) of 2 November 1975 and 380 (1975) of 6 November 1975. In the last of those resolutions, it deplored the holding of the march announced by the King of Morocco and demanded that the Kingdom of Morocco immediately withdraw all the participants of that march from the territory of Western Sahara.

11      On 14 November 1975, a declaration of principle on Western Sahara (the Madrid Accords) was signed in Madrid (Spain) by the Kingdom of Spain, the Kingdom of Morocco and the Islamic Republic of Mauritania. In that declaration, the Kingdom of Spain reiterated its decision to decolonise Western Sahara. Further, it was agreed that the powers and responsibilities of the Kingdom of Spain, as the administering power in Western Sahara, would be transferred to a temporary tripartite administration.

12      On 26 February 1976, the Kingdom of Spain informed the UN Secretary-General that from that date it was withdrawing its presence from the Territory of Western Sahara and that, henceforward, it considered itself exempt from any responsibility of any international nature in connection with the administration of the territory. In the meantime, an armed conflict between the Kingdom of Morocco, the Islamic Republic of Mauritania and the Front Polisario had begun in Western Sahara.

13      On 14 April 1976, the Kingdom of Morocco and the Islamic Republic of Mauritania signed an agreement relating to their border, according to which they divided up the Territory of Western Sahara between themselves. However, pursuant to a peace agreement concluded in August 1979 between it and the Front Polisario, the Islamic Republic of Mauritania withdrew from the Territory of Western Sahara. Following that withdrawal, Morocco extended its occupation to the territory evacuated by Mauritania.

14      In Resolution 34/37 of 21 November 1979 on the Question of Western Sahara, the UN General Assembly reaffirmed the ‘inalienable right of the people of Western Sahara to self-determination and independence’ and welcomed the peace agreement between the Islamic Republic of Mauritania and the Front Polisario (paragraph 13 above). It also deeply deplored ‘the aggravation of the situation resulting from the continued occupation of Western Sahara by Morocco and the extension of that occupation to the territory recently evacuated by Mauritania’. It urged the Kingdom of Morocco to join in the peace process and, to that end, it recommended that the Front Polisario, ‘the representative of the people of Western Sahara, should participate fully in any search for a just, lasting and definitive political solution of the question of Western Sahara’.

15      The armed conflict between the Front Polisario and the Kingdom of Morocco continued. However, on 30 August 1988 the two parties accepted, in principle, proposals for settlement put forward, in particular, by the UN Secretary-General. That plan was based on a ceasefire between the warring parties and provided for a transitional period which was to enable the organisation of a referendum on self-determination under UN supervision. By Resolution 690 (1991) of 29 April 1991 on the Situation concerning Western Sahara, the Security Council established under its authority a UN mission for the organisation of a referendum in Western Sahara (Minurso). After the deployment of the Minurso, the ceasefire between the Kingdom of Morocco and the Front Polisario has been observed on the whole, but the referendum has not yet been organised, although attempts to that effect and negotiations between the two parties concerned are continuing.

16      Currently, most of the territory of Western Sahara is controlled by the Kingdom of Morocco, while the Front Polisario controls a smaller, very sparsely populated area in the east of the territory. The territory controlled by the Front Polisario is separated from that controlled by the Kingdom of Morocco by a wall of sand constructed by the latter and guarded by the Moroccan army. A large number of refugees from Western Sahara live in camps administered by the Front Polisario, situated in Algerian territory close to Western Sahara.

 The contested decision and its background

17      The Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2000 L 70, p. 2) (‘the Association Agreement with Morocco’) was concluded in Brussels on 26 February 1996.

18      Pursuant to Article 1 thereof, it establishes an association between the European Community and the European Coal and Steel Community (designated together in the Association Agreement with Morocco as the ‘Community’) and their Member States, of the one part, and the Kingdom of Morocco, of the other part. The Association Agreement with Morocco is subdivided into eight titles relating, respectively, to the free movement of goods, the right of establishment and services, ‘[p]ayments, [c]apital, [c]ompetition and [o]ther [e]conomic [p]rovisions’, economic cooperation, social and cultural cooperation, financial cooperation and, lastly, institutional, general and final provisions. The Association Agreement with Morocco also contains seven annexes of which the first six list the goods covered by certain provisions of Articles 10, 11 and 12 thereof (which all appear under the title relating to the free movement of goods), whereas the seventh relates to intellectual, industrial and commercial property. In addition, five protocols relating, respectively, to the arrangements applying to imports into the Community of agricultural products originating in Morocco, the arrangements applying to imports into the Community of fishery products originating in Morocco, the arrangements applying to imports into Morocco of agricultural products originating in the Community, the definition of ‘originating products’ and methods of administrative cooperation and, finally, mutual assistance in customs matters between the administrative authorities, are annexed to the Association Agreement with Morocco. Protocols 1, 4 and 5 contain their own annexes which, in the case of Protocol 4 relating to the definition of ‘originating products’, are very voluminous.

19      The Association Agreement with Morocco, the protocols annexed to it and the declarations and exchanges of letters annexed to the final act were approved on behalf of the European Community and the European Coal and Steel Community by Decision 2000/204/EC, ECSC of the Council and of the Commission of 24 January 2000 on the conclusion of the Association Agreement with Morocco (OJ 2000 L 70, p. 1).

20      Pursuant to Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Association Agreement with Morocco (OJ 2012 L 241, p. 2) (‘the contested decision’), the Council of the European Union approved on behalf of the European Union the Agreement in the form of an Exchange of Letters between the Union and Kingdom of Morocco concerning reciprocal liberalisation measures, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Association Agreement with Morocco.

21      The text of the agreement approved by the contested decision, which was published in the Official Journal of the European Union, deletes Article 10 of the Association Agreement with Morocco, in Title II thereof, relating to the free movement of goods and amends Articles 7, 15, 17 and 18 of the same title and the heading of Chapter II, also under that title. Furthermore, the agreement approved by the contested decision replaces the text of Protocols 1 to 3 of the Association Agreement with Morocco.

 Procedure and forms of order sought

22      By application lodged at the Registry of the General Court on 19 November 2012, the applicant brought the present action. On 2 and 31 January 2013, in response to a request to put the application in order, the applicant filed evidence, inter alia, that the authority granted to its lawyer had been properly conferred on him by a person authorised to act on behalf of the Front Polisario, and its constituting document.

23      On 16 April 2013, after the Council’s defence was lodged, the General Court asked the applicant, by way of a measure of organisation of procedure, to answer a number of questions. In that context, it asked the applicant to indicate, with supporting evidence, whether it was a legally constituted authority under the law of an internationally recognised State. In addition, it requested the applicant to submit its observations on the arguments set out in the Council’s defence, according to which the action should be dismissed as inadmissible.

24      The applicant answered the questions of the General Court by document lodged at the General Court Registry on 26 September 2013.

25      By order of the President of the Eighth Chamber of the General Court of 6 November 2013, the European Commission was granted leave to intervene in support of the form of order sought by the Council. It lodged its statement in intervention on 17 December 2013. The Council and the applicant submitted their observations on the statement in intervention on 24 January and 20 February 2014 respectively.

26      At the proposal of the Judge-Rapporteur, the General Court (Eighth Chamber) decided to open the oral procedure. By way of measures of organisation of procedure, it asked the Council and the Commission to answer a question. The parties replied within the time prescribed.

27      By document lodged at the Court Registry on 2 June 2015, the applicant sought leave to add three documents to the file that had not previously been submitted, which it regarded as relevant for the resolution of the dispute. By decision of 12 June 2015, the President of the Eighth Chamber of the General Court decided to add that request and the documents annexed to it to the case file.

28      The defendant and the intervener submitted their observations relating to the documents in question at the hearing. In that context, the Council argued that they had been submitted out of time and that, in any event, they did not add any new evidence to the proceedings. For its part, the Commission expressed reservations as to their relevance to the resolution of the dispute.

29      The applicant claims that the General Court should annul the contested decision and ‘as a consequence, all the implementing acts’.

30      However, at the hearing, the applicant’s representative indicated that the reference to ‘all implementing acts’ resulted from a clerical error and that the applicant’s form of order should be understood as meaning that it requested only the annulment of the contested decision. Formal notice of that statement was taken in the minutes of the hearing.

31      Furthermore, in its submissions on the Commission’s statement in intervention, the applicant sought, in particular, an order that the Council and the Commission pay the costs.

32      The Council claims that the General Court should:

–        dismiss the action as inadmissible;

–        if the General Court were to declare the action to be admissible, dismiss the action as unfounded;

–        order the applicant to pay the costs.

33      The Commission supports the Council’s form of order seeking to have the action dismissed as inadmissible or, in the alternative, as unfounded and, in any event, claims that the applicant should be ordered to pay the costs.

 Admissibility

 The capacity of the Front Polisario to bring proceedings

34      Under the fourth paragraph of Article 263 TFEU, any natural or legal person may, under the conditions laid down in the first and second paragraphs, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.

35      Article 44(5) of the Rules of Procedure of the General Court of 2 May 1991, which were applicable at the time the application was lodged, provided as follows:

‘An application made by a legal person governed by private law shall be accompanied by:

(a)      the instrument or instruments constituting and regulating that legal person or a recent extract from the register of companies, firms or associations or any other proof of its existence in law;

(b)      proof that the authority granted to the applicant’s lawyer has been properly conferred on him by someone authorised for the purpose.’

36      Additionally, under Article 44(6) of the Rules of Procedure of 2 May 1991, if the application does not comply with the requirements set out in Article 44(3) to (5) thereof, the Registrar is to prescribe a reasonable period within which the applicant is to comply with them whether by putting the application itself in order or by producing any of the documents mentioned in those provisions.

37      In the application, the applicant states that it is ‘a subject of international law which has the international legal personality granted to national liberation movements under international law’. It also claims, relying on a number of documents that it attached to the application, that it has been ‘recognised as representing the Sahrawi people … by the bodies of the UN, the European Union and the [Kingdom of] Morocco, in negotiations’. It adds that both the Security Council and its General Assembly have recognised the validity of the peace agreement it concluded with Mauritania in August 1979 (see paragraph 13 above). Finally, it relies on the fact that, in two resolutions, the European Parliament requested it and the Kingdom of Morocco to fully cooperate with the International Committee of the Red Cross and with the UN.

38      The applicant did not attach to its application any documents such as those laid down in Article 44(5) of the Rules of Procedure of 2 May 1991. The Registry set a time limit for the purposes of putting the application in order, following which the applicant produced copies of its constituting document, a mandate to its lawyer drawn up by a person duly authorised by its constituting document, namely by its Secretary-General, and evidence of his election. However, it has not produced any other documents to show that it has a legal personality.

39      In those circumstances, the General Court adopted the measure of organisation of procedure mentioned in paragraph 23 above.

40      In answer to the questions of the General Court, the applicant declared as follows:

‘The Front Polisario is not a legally constituted body according to the law of any State, whether internationally recognised or not. In the same way as a foreign State or the European Union itself, the Front Polisario cannot base its legal existence on the internal law of a State.’

41      It also stated that it was ‘a subject of public international law’ and added:

‘There is absolutely no requirement for the Front Polisario to produce evidence of its constitution according to the national law of an internationally recognised State. As the incarnation of the sovereignty of the Sahrawi people, its existence cannot depend on the national legal system of the former colonial power, the Kingdom of Spain, which has failed to fulfil its international duties for 40 years and, even less on the occupying power, Morocco, which imposes its national legal system by an illegal use of armed force …’

42      The Council asserts that the applicant ‘has not proved the existence of its legal capacity to bring the present action’. It argues that the applicant appears to equate its status of representative of the people of Western Sahara to the existence of legal personality as of right with regard to international law, which is specific to sovereign States. The Council does not accept that those two concepts may be treated in the same way or that the applicant may be treated in the same way as a State.

43      The Council adds that even if the applicant were recognised as a national liberation movement and that, as a result, it has legal personality, that does not mean automatically that it has a right to bring legal proceedings before the Court of the European Union. According to the Council, the applicant’s recognition by the UN as the representative of the people of Western Sahara entitles it, at most, to take part in negotiations concerning the status of Western Sahara which are conducted by the UN and, together with the Kingdom of Morocco, to be its negotiating partner for that purpose. However, that recognition does not confer on it locus standi before courts and tribunals outside the UN context which are not charged with resolving the international dispute between it and the Kingdom of Morocco.

44      The Commission states that it does not challenge the ‘capacity as representative of the Sahrawi people enjoyed by the Front Polisario which was recognised by the UN General Assembly’.

45      However, it adds:

‘[T]he legal personality of the Front Polisario is questionable. As the representative of the Sahrawi people it should have at least a functional and transitional legal personality.’

46      Having regard to the parties’ arguments, first of all, it should be stated that, in the present case, the issue is not to determine whether the Front Polisario may be classified as a ‘national liberation movement’ or even whether such a classification, assuming it to be correct, is sufficient to confer it with legal personality. The question to be decided by the General Court is whether the Front Polisario may bring an action before it seeking the annulment of the contested decision, pursuant to Article 263, fourth paragraph, TFEU.

47      Next, it is clear from the wording of Article 263, fourth paragraph, TFEU that only natural persons or entities with legal personality may bring an action for annulment under that provision. Thus, in its judgment of 27 November 1984 in Bensider and Others v Commission (50/84, ECR, EU:C:1984:365, paragraph 9), the Court of Justice of the European Union dismissed as inadmissible an action in so far as it had been brought by a commercial company which, at the time that action was brought, had not yet acquired legal personality.

48      However, in its judgment of 28 October 1982 in Groupement des Agences de voyages v Commission (135/81, ECR, EU:C:1982:371, paragraph 10), the Court of Justice observed that the concept of ‘legal person’, as it appears in Article 263, fourth paragraph, TFEU, is not necessarily the same as those specific to the various legal systems of the Member States. Thus, in the case which gave rise to that judgment, the Court of Justice declared admissible an action brought by an ‘an ad hoc association of 10 travel agencies grouped together in order to respond jointly to an invitation to tender’ against a Commission decision excluding that association from an invitation to tender. The Court of Justice observed, in that regard, that the Commission had itself acknowledged the admissibility of the offer submitted by the association concerned and had rejected it after a comparative examination of all the tenderers. Consequently, the Court of Justice held that the Commission could not challenge the capacity to institute proceedings of a body that it had allowed to participate in an invitation to tender and to which it had addressed a negative decision after a comparative examination of all the tenderers (judgment in Groupement des Agences de voyages v Commission, EU:C:1982:371, paragraphs 9 to 12).

49      Similarly, in its judgments of 8 October 1974 in Union syndicale — Service public européen and Others v Council (175/73, ECR, EU:C:1974:95, paragraphs 9 to 17), and Syndicat général du personnel des organismes européens v Commission (18/74, ECR, EU:C:1974:96, paragraphs 5 to 13), the Court of Justice listed a certain number of factors, namely, first, the fact that the officials of the European Union enjoy the right of association and, in particular, may be members of trade unions or staff associations, second, the fact that the applicants in those two cases were associations organising a substantial number of officials and servants of the EU institutions, third, the fact that their constitutional structures were such as to endow them with the necessary independence to act as responsible bodies in legal matters and, fourth, the fact that the Commission officially recognised them as a negotiating bodies, in order to conclude that it was impossible to deny them capacity to institute proceedings before the Courts of the European Union, by bringing an action for annulment in compliance with the conditions of Article 263, fourth paragraph, TFEU.

50      Finally, it should also be recalled that, in its judgment of 18 January 2007 in PKK and KNK v Council (C‑229/05 P, ECR, EU:C:2007:32, paragraphs 109 to 112), the Court of Justice declared admissible an action for annulment brought by an entity subject to restrictive measures in the context of combating terrorism, without examining the question whether that entity had legal personality. Referring to the case-law according to which the European Union is a Union under the rule of law, the Court of Justice observed that, if the EU legislature regarded the entity in question as having an existence sufficient to be the subject of the restrictive measures at issue, consistency and justice required that that entity be recognised as having the capacity to challenge that decision. Any other conclusion would have the result that an organisation could be included in the list concerned without being able to bring an action challenging its inclusion.

51      However, although the case-law cited above shows that the Courts of the European Union may recognise the right to take part in proceedings before them of an entity which does not have legal capacity like that conferred by law on a Member State or a foreign State, or which does not have legal personality under that law, it must be observed that, in its order of 14 November 1963 in Lassalle v Parliament (15/63, ECR, EU:C:1963:47, p. 50), the Court of Justice observed that the basic aspects of the capacity to bring legal proceedings before the Courts of the European Union include, inter alia, independence and responsibility, even limited, and it dismissed an application for leave to intervene submitted by the Staff Committee of the European Parliament which, it declared, did not satisfy those criteria. That finding is also reflected in the case-law cited in paragraph 49 above, since it explains the finding of the Court of Justice that the constituting document and the internal structure of the unions having brought actions in the cases concerned gave them the independence necessary to act as responsible entities in legal relationships.

52      In the light of that case-law, it must be concluded that, in certain specific cases, an entity which does not have a legal personality under the law of a Member State or of a non-member State may nevertheless be regarded as a ‘legal person’ within the meaning of Article 263, fourth paragraph, TFEU and be allowed to bring an action for annulment on the basis of that provision (see, to that effect, judgments in Groupement des Agences de voyages v Commission, cited in paragraph 48 above, EU:C:1982:371, paragraphs 9 to 12, and PKK and KNK v Council, cited in paragraph 50 above, EU:C:2007:32, paragraphs 109 to 112). That is the case, in particular, where by their acts or actions, the European Union and its institutions treat the entity in question as being a distinct person, which may have rights specific to it, or be subject to obligations or restrictions.

53      However, that presupposes that the entity in question has constituting documents and an internal structure giving it the independence necessary to act as a responsible body in legal matters (see, to that effect, order in Lassalle v Parliament, cited in paragraph 51 above, EU:C:1963:47, p. 50; judgments in Union syndicale — Service public européen and Others v Council, cited in paragraph 49 above, EU:C:1974:95, paragraphs 9 to 17, and Syndicat général du personnel des organismes européens Commission, cited in paragraph 49 above, EU:C:1974:96, paragraphs 5 to 13).

54      In the present case, it must be held that the conditions mentioned in paragraph 53 above are fulfilled as far as concerns the Front Polisario. It has its own constituting document, of which it produced a copy, and a fixed internal structure, having, inter alia, a secretary-general who gave authority to his representative to bring the present action. To all appearances, that structure enables it to act as a responsible body in legal relations, especially since, as evidenced by the various documents it relies on, it has participated in UN-led negotiations and has even signed a peace agreement with an internationally recognised State, namely the Islamic Republic of Mauritania.

55      As regards the findings mentioned in paragraph 52 above, it is certainly true that the Front Polisario has not been the subject of acts of the European Union or its institutions of a nature similar to those at issue in the cases which gave rise to the judgments in Groupement des Agences de voyages v Commission, cited in paragraph 48 above (EU:C:1982:371), and PKK and KNK v Council, cited in paragraph 50 above (EU:C:2007:32). The two resolutions of the Parliament relied on by it (see paragraph 37 above) are of a different nature, since they do not produce, at least with regard to it, binding legal effects.

56      It is nonetheless true that, as is clear from the information summarised in paragraphs 1 to 16 above, Western Sahara is a territory whose international status is currently undetermined. Both the Kingdom of Morocco and the applicant stake claim to it and the UN has worked for many years towards a peaceful resolution of that dispute. As is clear from the pleadings of the Council and the Commission, both the European Union and its Member States refrain from any intervention or support for either side in that dispute and, should the case arise, will accept any solution decided in accordance with international law led by the UN. In that connection, the Commission adds that it supports the UN Secretary-General’s efforts to reach a fair, long-lasting and mutually acceptable political solution, which allows self-determination for the people of Western Sahara. It continues by stating that ‘in the meantime, Western Sahara remains a non-self-governing territory administered de facto by the Kingdom of Morocco’.

57      First, it must therefore be held that the applicant is one of the parties to a dispute concerning the fate of that non-self-governing territory and, as a party to that dispute, it is mentioned by name in the texts relating to it, including the resolutions of the Parliament mentioned in paragraph 37 above.

58      Second, it must also be stated that, currently, it is impossible for the Front Polisario to be formally constituted as a legal person under the law of Western Sahara, as this law is still non-existent. Although it true, as the Commission observes, that the Kingdom of Morocco administers de facto practically all the territory of Western Sahara, it is a factual situation opposed by the Front Polisario and which is precisely the source of the dispute between it and the Kingdom of Morocco that the UN is trying to resolve. It is certainly possible for the Front Polisario to be constituted as a legal person in accordance with the law of a foreign State, but it cannot be required to do so.

59      Third, lastly, it must be recalled that the Council and the Commission themselves recognise that the international status and legal position of Western Sahara present the specificities mentioned in paragraph 58 above and take the view that the definitive status of that territory and, therefore, the law applicable to it must be determined in the context of the UN-led peace process. It is precisely the UN which considers the Front Polisario as being an essential participant in that process.

60      Taking account of those very specific circumstances, it must be held that the Front Polisario must be regarded as a ‘legal person’ within the meaning of Article 263, fourth paragraph, TFEU, and that it may bring an action for annulment before the Courts of the European Union even though it does not have legal personality according to the law of a Member State or a third State. Thus, as set out above, it can only have such a personality in accordance with the law of Western Sahara which, however, at the present time, is not a State recognised by the European Union and its Member States and does not have its own law.

 The direct and individual concern to the Front Polisario of the contested decision

61      The applicant asserts that it is individually affected by the contested decision ‘by reason of the legal qualities specific to it, because it is the legitimate representative of the Sahrawi people, recognised as such by the UN and the European Union’. It adds that it ‘is the sole organisation qualified to represent the people who live’ in the territory of Western Sahara.

62      It also states that the contested decision ‘directly produces effects on the legal position of the Sahrawi people because it does not leave any discretion to the Member States as to the application’ of the agreement it refers to. According to the applicant, the implementation of that agreement does not require the Member States to adopt implementing measures and each Member State, the Kingdom of Morocco and any undertaking may rely on the direct effect of the contested decision.

63      The Council, supported by the Commission, denies that the applicant is directly and individually concerned by the contested decision.

64      As regards direct concern, the Council contends that it is difficult to understand how the contested decision, which concerns the conclusion of an international agreement between the European Union and the Kingdom of Morocco, could directly affect the applicant’s legal position. The Council argues that that decision cannot, by its nature, produce legal effects on third parties as it merely approves an international agreement on behalf of the European Union. Its legal effects are produced only with regard to the European Union and its institutions and not with regard to third persons.

65      As regards the individual concern of the applicant, the Council argues that the contested decision seeks to conclude an agreement between the Kingdom of Morocco and the European Union and individually concerns those two subjects alone.

66      It adds that the existence of a dispute between the applicant and the Kingdom of Morocco is not connected to the contested decision, nor is it affected in any way by the agreement concluded pursuant to it.

67      It must be recalled that Article 263, fourth paragraph, TFEU provides for two situations in which natural or legal persons are accorded standing to institute proceedings against an act which is not addressed to them. First, such proceedings may be instituted if the act is of direct and individual concern to them. Second, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them (judgments of 19 December 2013 in Telefónica v Commission, C‑274/12 P, ECR, EU:C:2013:852, paragraph 19, and 27 February 2014 in Stichting Woonlinie and Others v Commission, C‑133/12 P, ECR, EU:C:2014:105, paragraph 31).

68      According to the case-law, the concept of ‘regulatory act’ within the meaning of Article 263, fourth paragraph, TFEU must be understood as covering all acts of general application other than legislative acts (judgment of 3 October 2013 in Inuit Tapiriit Kantami and Others v Parliament and Council, C‑583/11 P, ECR, EU:C:2013:625, paragraphs 60 and 61).

69      The distinction between a legislative act and a regulatory act, according to the FEU Treaty, is based on the criterion of the procedure, legislative or not, which led to its adoption (order of 6 September 2011 in Inuit Tapiriit Kantami and Others v Parliament and Council, T‑18/10, ECR, EU:T:2011:419, paragraph 65).

70      In that connection, it must be recalled that Article 289(3) TFEU states that legal acts adopted by legislative procedure constitute legislative acts. A distinction is made between the ordinary legislative procedure, as stated in Article 289(1), second sentence, TFEU, which is defined in Article 294 TFEU, and special legislative procedures. In that connection, Article 289(2) TFEU provides that in the specific cases provided for by the Treaties, the adoption, inter alia, of a decision by the Council with the participation of the Parliament constitutes a special legislative procedure.

71      In the present case, as appears from its preamble, the contested decision was adopted following the procedure defined in Article 218(6)(a) TFEU, which provides that the Council, on a proposal by the negotiator, in this case the Commission, is to adopt a decision concluding the agreement after obtaining the consent of the European Parliament. That procedure satisfies the criteria set out in Article 289(2) TFEU and therefore constitutes a special legislative procedure.

72      It follows that the contested decision is a legislative act and, accordingly does not constitute a regulatory act. Therefore it is the first of the two cases considered in paragraph 67 above which is relevant in the present case. Consequently, taking account of the fact that the applicant is not the addressee of the contested decision, it must be shown that that decision directly and individually concerns the applicant in order for the present proceedings to be admissible.

73      In order to examine that issue, it must be determined whether the agreement, the conclusion of which was approved by the contested decision, applies to the territory of Western Sahara, since the applicant may be directly and individually concerned by the contested act by reason of its status as a party involved in the process of deciding the fate of the territory concerned (see paragraph 57 above) and its claim to be the legitimate representative of the Sahrawi people (see paragraph 61 above).

74      In that connection, the Council and the Commission assert that, under Article 94 thereof, the Association Agreement with Morocco applies to the territory of the Kingdom of Morocco. The Council submits that, as that article does not define the territory of the Kingdom of Morocco, the Association Agreement with Morocco does not prejudge the legal status of Western Sahara and does not lead to any formal recognition of the rights claimed by the Kingdom of Morocco with regard to that territory. No provision of the contested decision, or the agreement approved by it, provides that the scope of the latter also extends to Western Sahara.

75      The Commission recalls, in that connection, the terms of the Declaration on Principles of International Law concerning Friendly Relations and Cooperation among States in accordance with the Charter of the United Nations, approved by Resolution 2625 (XXV) of the UN General Assembly of 24 October 1970, according to which ‘[t]he territory of a colony or other Non-Self-Governing Territory has, under the [United Nations Charter], a status separate and distinct from the territory of the State administering it’ and ‘such separate and distinct status under the Charter shall exist until the people of the colony or Non-Self-Governing Territory have exercised their right of self-determination in accordance with the [United Nations] Charter, and particularly its purposes and principles’. According to the Commission, it follows that a non-self-governing territory does not belong to the administering power, but has a separate status with regard to international law. International agreements concluded by the power administering a non-self-governing territory do not apply on that territory, except by express extension. Therefore, the Commission asserts that, in the present case, in the absence of such an extension, the Association Agreement with Morocco applies only to products originating in the Kingdom of Morocco, a State which, under international law, does not include Western Sahara.

76      The Front Polisario replies that the Kingdom of Morocco does not administer Western Sahara under Article 73 of the United Nations Charter, but occupies it militarily. The UN considers that the Kingdom of Spain is still the power administering Western Sahara. The Kingdom of Morocco is an occupying power for the purposes of international humanitarian law.

77      The Front Polisario adds that the Kingdom of Morocco applies to Western Sahara the agreements concluded with the European Union including the Association Agreement with Morocco. It is a well-known fact, known by both the Council and the Commission. The Front Polisario relies on a number of elements in support of that statement.

78      First, it relies on the common response given by the High Representative of the Union for Foreign Affairs and Security Policy, Vice-President of the Commission, Catherine Ashton, on behalf of the Commission to the written questions from Members of the European Parliament with the references E-001004/11, P-001023/11 and E-002315/11 (OJ 2011 C 286 E, p. 1).

79      Second, it argues that, as a number of documents available on the website of the Commission Directorate-General (DG) ‘Health and Food Safety’ show, after the conclusion of the Association Agreement with Morocco, the Food and Veterinary Office, which is part of that DG, made a number of visits to Western Sahara to check of compliance by the Moroccan authorities with health standards established by the European Union.

80      Third, it argues that the list of Moroccan exporters approved under the Association Agreement with Morocco, published on the Commission’s website, contains, in total, 140 undertakings which are established in Western Sahara.

81      Requested, by measure of organisation of procedure, to submit its observations on the Front Polisario’s allegations set out above, the Council stated that it fully supported the UN’s efforts to find a stable and permanent solution to the question of Western Sahara and that no EU institution had ever recognised, de facto or de jure, Moroccan sovereignty over Western Sahara.

82      Nonetheless, according to the Council, the EU institutions cannot ignore the facts, that is to say, that the Kingdom of Morocco is the power which is de facto administering Western Sahara. Therefore, as regards the territory of Western Sahara, that means that the European Union must address the Moroccan authorities, which are the only authorities which could implement the provisions of the agreement in that territory, with due regards to the interests and rights of the Sahrawi people. That fact does not lead to any recognition de facto or de jure of any sovereignty of the Kingdom of Morocco over the territory of Western Sahara.

83      For its part, the Commission stated, in particular, in the same context, that the common response to the written questions submitted by the Members of the European Parliament with references E-1004/11, P-1023/11 and E-2315/11 showed that exports from Western Sahara enjoyed ‘de facto’ (and not legal) trade preference and recalled the obligations of the Kingdom of Morocco as the ‘de facto [administering] power’, of a non-self-governing territory. According to the Commission, nothing in that response shows any recognition of the annexation of Western Sahara by the Kingdom of Morocco or Moroccan sovereignty of that territory.

84      As to the documents mentioned in paragraph 79 above, the Commission pointed out that they are reports of a purely technical nature by its Food and Veterinary Office. It adds that such health inspections were necessary for any products to be imported in the European Union whether or not they are covered by an association agreement. Without them, no products could be exported to the European Union from the territory in question, which would not be favourable to the interests of the local populations. The fact that those reports treat the Moroccan authority as ‘the competent authority’ merely reflects the status of the Kingdom of Morocco as the power de facto administering Western Sahara and does not entail any recognition of its sovereignty.

85      According to the Commission, unless it seeks to exclude all exports from Western Sahara, the Front Polisario cannot seriously claim that, in matters of public health in Western Sahara, the Food and Veterinary Office should have the Front Polisario as the sole negotiating partner. It does not exercise any real power in the territory concerned and is not in a position to ensure that exports comply with the rules on public health.

86      Finally, the Commission essentially confirms the presence on the list of approved exporters mentioned in paragraph 80 above of undertakings established in Western Sahara. However, it stated that ‘as a matter of convenience’, the list concerned referred to regions as defined by the Kingdom of Morocco, without that being the sign of any acknowledgement of annexation.

87      In addition, at the hearing, both the Council and the Commission indicated, in answer to a question from the General Court, that the agreement referred to by the contested decision was applied de facto to the territory of Western Sahara. Formal notice of that statement was taken in the minutes of the hearing.

88      It should be noted that the question asked in paragraph 73 above ultimately requires an interpretation of the agreement, the conclusion of which was approved by the contested decision.

89      It should be recalled, first of all, that an agreement concluded by the Council with a non-Member State in accordance with Articles 217 TFEU and 218 TFEU, constitutes, as far as the European Union is concerned, an act of one of the institutions of the Union, within the meaning of point (b) of the first paragraph of Article 267 TFEU; next, from the moment it enters into force the provisions of such an agreement form an integral part of the legal order of the European Union; and, finally, that, within the framework of that legal order, the Court has jurisdiction to give preliminary rulings concerning the interpretation of such an agreement (see, to that effect, judgment of 25 February 2010 in Brita, C‑386/08, ECR, EU:C:2010:91, paragraph 39 and the case-law cited).

90      In addition, having been concluded by two subjects of public international law, the agreement referred to by the contested decision is governed by international law and, more specifically, as regards its interpretation, by the international law of treaties (see, to that effect, judgment in Brita, cited in paragraph 89 above, EU:C:2010:91, paragraph 39).

91      The international law of treaties was codified essentially in the Vienna Convention of the Law of Treaties of 23 May 1969 (United Nations Treaty Series, Vol. 1155, p. 331) (‘the Vienna Convention’).

92      The rules laid down in the Vienna Convention apply to an agreement concluded between a State and an international organisation, such as the agreement referred to by the contested decision, in so far as the rules are an expression of general international customary law (see, to that effect, judgment in Brita, cited in paragraph 89 above, EU:C:2010:91, paragraph 41). Consequently, the agreement referred to in the contested decision must be interpreted in accordance with those rules.

93      Further, the Court has held that even though the Vienna Convention does not bind either the European Union or all its Member States, a series of provisions in that convention reflect the rules of customary international law which, as such, are binding upon the EU institutions and form part of its legal order (see, judgment in Brita, cited in paragraph 89 above, EU:C:2010:91, paragraph 42 and the case-law cited).

94      Pursuant to Article 31 of the Vienna Convention, a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. In that regard, at the same time as the context, account must be taken of any relevant rules of international law applicable in the relations between the parties.

95      In the judgment in Brita, cited in paragraph 89 above, (EU:C:2010:91, paragraphs 44 to 53), the Court of Justice held that an association agreement between the European Union and the State of Israel applicable to the ‘territory of the State of Israel’ had to be interpreted as meaning that it did not apply to products originating in the West Bank, a territory which is situated outside the territory of the State of Israel, as is internationally recognised, but which contains Israeli-occupied settlements, controlled by the State of Israel.

96      However, the Court of Justice reached that conclusion by taking into consideration, first, the general principle of international law of the relative effect of treaties, according to which treaties do not impose any obligations, or confer any rights, on third States (pacta tertiis nec nocent nec prosunt), which the Court of Justice held, finds particular expression in Article 34 of the Vienna Convention, under which a treaty does not create either obligations or rights for a third State without its consent (judgment in Brita, cited in paragraph 89 above, EU:C:2010:91, paragraph 44), and, second, the fact that the European Union had also concluded an association agreement with the Palestinian Liberation Organisation (PLO) for the benefit of the Palestinian Authority of the West Bank and the Gaza Strip, the latter being applicable inter alia, according to its terms, to the territory of the West Bank (judgment in Brita, cited in paragraph 89 above, EU:C:2010:91, paragraphs 46 and 47).

97      The facts of the present case are different, in so far as, in the present case, the European Union has not concluded an association agreement concerning products originating in Western Sahara, or with the Front Polisario, or with any State or other entity.

98      The agreement, the conclusion of which was approved by the contested decision, must therefore be interpreted in accordance with Article 31 of the Vienna Convention (see paragraph 94 above).

99      In accordance with that article, account must be taken in particular of the context in which an international treaty appears, such as the agreement referred to by the contested decision. All the factors mentioned in paragraphs 77 to 87 above are part of that context and show that the EU institutions were aware that the Moroccan authorities also applied the provisions of the Association Agreement with Morocco to the part of Western Sahara it controlled and did not oppose that application. To the contrary, the Commission cooperated to a certain extent with the Moroccan authorities with a view to that application and recognised the results of its application, by including undertakings established in Western Sahara among those included on the list mentioned in paragraph 74 above.

100    It must also be recalled that there is a divergence between the respective views of the European Union and the Kingdom of Morocco as to the international status of Western Sahara. If the European Union’s view is adequately and correctly summarised by the Council and the Commission (see paragraphs 74 and 75 above), it is common ground that the Kingdom of Morocco has a totally different view. In its opinion, Western Sahara is an integral part of its territory.

101    Thus, in Article 94 of the Association Agreement with Morocco, the reference to the territory of the Kingdom of Morocco may have been understood by the Moroccan authorities as including Western Sahara or, at least, the larger part controlled by it. Although, as stated, the EU institutions were aware that the Kingdom of Morocco took that view, the Association Agreement with Morocco does not include any interpretation clause and no other provision which would have the result of excluding the territory of Western Sahara from its scope.

102    Account should also be taken of the fact that the agreement referred to by the contested decision was concluded 12 years after the approval of the Association Agreement with Morocco and although the latter agreement had been implemented for the whole of that period. If the EU institutions wished to oppose the application to Western Sahara of the Association Agreement, as amended by the contested decision, they could have insisted on including a clause excluding such application into the text of the agreement approved by that decision. Their failure to do so shows that they accept, at least implicitly, the interpretation of the Association Agreement with Morocco and the agreement approved by the contested decision, according to which those agreements also apply to the part of Western Sahara controlled by the Kingdom of Morocco.

103    In those circumstances, it must be held that the agreement, the conclusion of which was approved by the contested decision, placed in its context as set out above, also applies to the territory of Western Sahara or, more precisely, to the largest part of that territory which is controlled by the Kingdom of Morocco.

104    It is by taking account of that finding that the question as to whether the Front Polisario is directly and individually concerned by the contested decision must be determined.

105    As regards direct concern, it follows from settled case-law that, in order to satisfy the requirement that the decision forming the subject matter of the proceedings must be of ‘direct concern’ to a natural or legal person, two cumulative criteria must be met, namely, first, the contested measure must directly affect the legal situation of the individual and, second, it must leave no discretion to its addressees, who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from EU rules without the application of other intermediate rules (see judgment of 10 September 2009 in Commission v Ente per le Ville Vesuviane and Ente per le Ville Vesuviane v Commission, C‑445/07 P and C‑455/07 P, ECR, EU:C:2009:529, paragraph 45 and the case-law cited).

106    In that connection, it must be observed that the fact relied on by the Council (see paragraph 63 above) that the contested decision concerns the conclusion of an international agreement between the European Union and the Kingdom of Morocco does not prevent it from producing legal effects with regard to third countries.

107    According to settled case-law, a provision in an agreement concluded by the European Union and its Member States with a non-member country must be regarded as being directly applicable when, regard being had to its wording and to the purpose and nature of the agreement, the provision contains a clear and precise obligation which is not subject, in its implementation or effects, to the adoption of any subsequent measure (see, judgment of 8 March 2011 in Lesoochranárske zoskupenie, C‑240/09, ECR, EU:C:2011:125, paragraph 44 and the case-law cited).

108    In the present case, it must be stated that the agreement in the form of an exchange of letters concluded pursuant to the contested decision has provisions containing clear and precise obligations, not subject, in their implementation or in their effects, to the adoption of any subsequent measures. It should be mentioned, by way of example, that Protocol 1 of the Association Agreement with Morocco, relating to the arrangements applicable to the importation into the European Union of agricultural products, processed agricultural products, fish and fishery products originating in the Kingdom of Morocco, contains Article 2, replaced pursuant to the agreement referred to by the contested decision, which provides in paragraph 1 thereof that customs duties applicable on imports into the European Union of agricultural products, processed agricultural products, fish and fishery products originating in Morocco are to be eliminated, except if otherwise provided for in paragraphs 2 and 3 of that article for the agricultural products and in Article 5 of the same Protocol for the processed agricultural products. It should also be mentioned that Protocol 2 of the Association Agreement with Morocco concerning the arrangements applicable to the importation into the Kingdom of Morocco of agricultural products, processed agricultural products, fish and fishery products originating in the European Union contains Article 2, replaced pursuant to the agreement approved by the contested decision, which contains specific tariff provisions applicable to imports into the Kingdom of Morocco of agricultural products, processed agricultural products, fish and fishery products originating in the European Union.

109    Those provisions produce effects on the legal position of the whole territory to which the agreement applies (and, therefore, the territory of Western Sahara controlled by the Kingdom of Morocco), in that they determine the conditions under which agricultural and fishery products may be exported from that territory to the European Union or may be imported from the European Union into the territory in question.

110    Those effects directly concern not only the Kingdom of Morocco, but also the Front Polisario, to the extent that, as is clear from the elements mentioned in paragraphs 1 to 16 above, the definitive international status of that territory has not yet been determined and must be determined in UN-led negotiations between the Kingdom of Morocco and, specifically, the Front Polisario.

111    For the same reason, the Front Polisario must be regarded as being individually concerned by the contested decision.

112    It must be recalled in that regard that, according to settled case-law, natural or legal persons satisfy the condition of individual concern only if the contested act affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons, and by virtue of these factors distinguishes them individually just as in the case of the person addressed (judgments of 15 July 1963 in Plaumann v Commission, 25/62, ECR, EU:C:1963:17, p. 107, and Inuit Tapiriit Kanatami and Others v Parliament and Council, cited in paragraph 68 above, EU:C:2013:625, paragraph 72).

113    The circumstances mentioned in paragraph 110 above do indeed constitute a factual situation which distinguishes the Front Polisario from all other persons and confers on it a particular attribute. The Front Polisario is the only other participant in the UN-led negotiations between it and the Kingdom of Morocco with a view to determining the definitive international status of Western Sahara.

114    Therefore, it must be held that since the Front Polisario is directly and individually concerned by the contested decision there is, from that point of view, no doubt as to the admissibility of the action, contrary to the Council and Commission’s arguments.

 Substance

115    In support of its application, the Front Polisario puts forward 11 pleas in law, alleging:

–        first, failure to state adequate reasons in the contested decision;

–        second, failure to comply with the ‘principle of consultation’;

–        third, infringement of fundamental rights;

–        fourth, ‘breach of the principle of consistency of the policy of the European Union, by failing to observe the principle of … sovereignty’;

–        fifth, ‘breach of the fundamental values of the European Union … and the principles governing its external action’;

–        sixth, ‘failure to achieve the objective of sustainable development’;

–        seventh, ‘incompatibility’ of the contested decision ‘with the principles and objectives of the European Union’s external action in the area of development cooperation’;

–        eighth, breach of the principle of protection of legitimate expectations;

–        ninth, ‘incompatibility’ of the contested decision ‘with several agreements concluded by the European Union’;

–        10th, the ‘incompatibility’ of the contested decision with ‘general international law’;

–        and, finally, 11th, the ‘law of international liability in EU law’.

116    As a preliminary point, it is clear from the arguments put forward by the Front Polisario in support of all of its pleas that its action seeks the annulment of the contested decision in so far as it approves the application to Western Sahara of the agreement to which it refers. As appears from the finding set out above, concerning the fact that the Front Polisario is directly and individually concerned by the contested decision, it is precisely the fact that that agreement also applies to Western Sahara that the Front Polisario is directly and individually concerned by the contested decision.

117    It must also be stated that the Front Polisario relies on several pleas, among which the first two concern the external legality of the contested decision, while the others concern its internal legality. In substance the applicant relies on the unlawfulness of the contested decision on the ground that it infringes European Union and international law. In reality, all the pleas in law in the application concern the question as to whether there is an absolute prohibition against concluding an international agreement on behalf of the European Union which may be applied to a territory in fact controlled by a non-member State, without the sovereignty of that State over that territory being recognised by the European Union and its Member States or, more generally, by all other States (‘the disputed territory’) and, where relevant, the existence of discretion of the EU institutions in that regard, the limits of that discretion and the conditions for its exercise.

118    Having made those observations, first of all, the first two pleas must be examined which, as the applicant itself points out, concern the external legality of the contested decision.

 First plea in law

119    The Front Polisario claims that the contested decision contains an insufficient statement of reasons. In recital 1 in the preamble thereto, that decision mentions only ‘gradual implementation of greater liberalisation of reciprocal trade’ and in recital 2, the ‘Action Plan of the European Neighbourhood Policy including a specific provision having the objective of the further liberalisation of trade’ adopted in July 2005 by the EU-Morocco Association Council. The Euro-Mediterranean policy is not limited to liberalisation of trade but encompasses other values fundamental to the EU.

120    The applicant adds that the Council did not conduct an impact assessment prior to the conclusion of the agreement. It argues that although such an assessment is optional, it becomes obligatory in the circumstances of the present case. Therefore, it is apparent that the Council has no concern for Western Sahara or for ‘international legality’.

121    According to settled law, the statement of reasons required by Article 296 TFEU must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the institution which adopted the measure so as to inform the persons concerned of the justification for the measure adopted and to enable the European Union judicature to exercise its powers of review. However, it is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 7 September 2006 in Commission v Spain, C‑310/04, ECR, EU:C:2006:521, paragraph 57 and the case-law cited).

122    Furthermore, in the case of a measure intended to have general application, as in the present case, the statement of reasons may be limited to indicating, first, the general situation which led to its adoption and, second, the general objectives which it is intended to achieve (judgments of 22 November 2001 in Netherlands v Council, C‑301/97, ECR, EU:C:2001:621, paragraph 189, and Spain v Council, cited in paragraph 121 above, EU:C:2006:521 paragraph 59).

123    Having regard to that case-law, it must be concluded that the contested decision is supported by reasons to the requisite legal standard. First, it mentions the situation as a whole which led to its adoption, namely the existence of the Association Agreement with Morocco which provides, in Article 16 thereof, for the gradual implementation of greater liberalisation of reciprocal trade in agricultural products, processed agricultural products, fish and fishery products (recital 1 of the contested decision), and the Action Plan of the European Neighbourhood Policy, adopted by the EU-Morocco Association Council in July 2005, which contains a specific provision having the objective of the further liberalisation of trade in agricultural products, processed agricultural products, fish and fishery products (recital 2 of the contested decision). Second, it sets out the general objectives that it intends to achieve, namely, greater liberalisation of reciprocal trade in agricultural products, processed agricultural products, fish and fishery products between the EU and the Kingdom of Morocco.

124    As regards the Front Polisario’s arguments that the Council has no concern for Western Sahara, that it failed to conduct an impact assessment prior to the conclusion of the agreement referred to by the contested decision and, that if the Council had considered the question of the applicability to the territory of Western Sahara of the agreement referred to by the contested decision, it would not have concluded that agreement, it must be stated that they have no relation to the supposed breach of the duty to state reasons.

125    In reality, by those arguments, the Front Polisario criticises the Council for failing to examine the relevant evidence in the case before adopting the contested decision. To be able to analyse those arguments, it must be determined, first of all, whether and, if necessary, under what conditions, the Council could approve the conclusion of an agreement with the Kingdom of Morocco which also applies to the territory of Western Sahara.

126    Accordingly, those arguments are examined in paragraph 223 et seq., with the applicant’s other arguments relating to the implementation and compliance by the EU institutions of their discretion.

127    Subject to the examination of those arguments, the first plea must be dismissed.

 The second plea in law

128    The Front Polisario claims that the contested decision is ‘void for infringement of an essential procedural requirement’, as the Council did not consult it before concluding the agreement referred to by that decision, even though it is the only ‘legitimate representative of the Sahrawi people’.

129    The Front Polisario takes the view that the Council’s obligation to consult it derives from Article 41 of the Charter of Fundamental Rights of the European Union. In that context, it relies on Article 220(1) TFEU which provides as follows:

‘The Union shall establish all appropriate forms of cooperation with the organs of the United Nations and its specialised agencies, the Council of Europe, the Organisation for Security and Cooperation in Europe and the Organisation for Economic Cooperation and Development.

The Union shall also maintain such relations as are appropriate with other international organisations.’

130    Finally, the Front Polisario relies on an ‘obligation of consultation of international origin’ which, in its opinion, the Council has with respect to it.

131    The Council and the Commission challenge the applicant’s arguments claiming, in particular, that the adversarial principle does not apply to procedures of a legislative nature.

132    It should be recalled that although Article 41(1) of the Charter of Fundamental Rights provides that every person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions and bodies of the Union, Article 41(2)(a) thereof provides that that right includes the right of every person to be heard, before any individual measure which would affect him or her adversely is taken. Thus, the wording of that provision only concerns individual measures.

133    Furthermore, the General Court has held on many occasions that the case-law on the right to be heard cannot be transposed to the context of a legislative process leading to the adoption of general laws which involve a choice of economic policy and apply to all operators concerned (judgments of 11 December 1996 in Atlanta and Others v EC, T‑521/93, ECR, EU:T:1996:184, paragraph 70; 11 September 2002 Alpharma v Council, T‑70/99, ECR, EU:T:2002:210, paragraph 388; and 11 July 2007 Sison v Council, T‑47/03, EU:T:2007:207, paragraph 144).

134    The fact that the person concerned is directly and individually concerned by the legislative measure or measure of general application at issue does not alter that finding (see judgment in Alpharma v Council, cited in paragraph 133 above, EU:T:2002:210, paragraph 388 and the case-law cited).

135    It is true that, in the case of acts of general application laying down restrictive measures as part of the common foreign and security policy against natural persons or entities, it has been held that the safeguarding of the right to a fair hearing was, in principle, fully applicable and that the person concerned had the right to be afforded the opportunity effectively to make known his view on the evidence adduced against it (see, to that effect, judgment of 12 December 2006 in Organisation des Modjahedines du peuple d’Iran v Council, T‑228/02, ECR, EU:T:2006:384, paragraphs 91 to 108, and Sison v Council, cited in paragraph 133 above, EU:T:2007:207, paragraphs 139 to 155).

136    However, that finding is justified by the fact that such acts may impose restrictive economic and financial measures on the persons and entities specifically concerned by them (judgments in Organisation des Modjahedines du peuple d’Iran v Council, cited in paragraph 135 above, EU:T:2006:384, paragraph 98, and Sison v Council, cited in paragraph 133 above, EU:T:2007:207, paragraph 146). Therefore, that case-law cannot be applied to the present case.

137    It follows that, since the contested decision was adopted as a result of a special legislative procedure to approve the conclusion of an agreement of general scope and application, the Council was not obliged to consult the Front Polisario before its adoption, contrary to the latter’s arguments.

138    Furthermore, no obligation to consult the Front Polisario before the adoption of the contested decision derives from international law. In that connection, it must be observed that the applicant has not provided any details as to the origin and scope of the ‘obligation of consultation originating from international law’ which it relies on and to which it makes a vague reference in its pleadings.

139    Accordingly, the second plea in law must be rejected as unfounded.

 The other grounds

140    The Front Polisario’s 3rd to 11th pleas all concern the internal legality of the contested decision. Thus, as already noted in paragraph 117 above, the Front Polisario argues essentially that, since it approved the conclusion of an agreement with the Kingdom of Morocco which is also applicable in the part of Western Sahara controlled by the latter, despite the absence of international recognition of Moroccan claims over that territory, the Council has vitiated the contested decision with illegality. That illegality results from the infringement of EU law, with respect to the grounds put forward in the 3rd to 8th pleas, and international law, with respect to the grounds put forward in the 9th to 11th pleas.

141    Therefore, it must be determined whether and, if appropriate, under what conditions the EU may conclude an agreement with a third State such as that approved by the contested decision which is also applicable to a disputed territory.

 The existence of an absolute prohibition on the conclusion of an agreement capable of being applied to a disputed territory

142    First of all, it must be determined whether the pleas and arguments relied on by the Front Polisario support the conclusion that, in any event, the Council is prohibited from approving the conclusion of an agreement with a third State which may be applied to a disputed territory.

–       The third ground of appeal

143    In its third plea, the applicant refers to the provisions and case-law relating to observance of fundamental rights by the European Union to support its argument that, by deciding ‘to implement an agreement which flouts the right to self-determination of the Sahrawi people and which has the immediate effect of encouraging the policy of annexation conducted by Morocco, the occupying power, the Council breaches the principle of freedom, security and justice, and turns its back on the respect for the fundamental rights and legal systems of the Member States’.

144    According to the Front Polisario ‘there is an attack on freedom, as the freedom of a people is ignored and, worse, is opposed by that decision, which encourages economic domination and has the effect of altering the population structures, which renders even more complex the prospect of a referendum on self-determination’. The Front Polisario also pleads ‘interference with security and legal certainty’, referring to alleged infringements of ‘the individual rights’ of the ‘Sahrawi people’ by ‘an annexationist regime’, and the absence of value of certificates of origin to be issued by the Moroccan authorities for the export of products originating in Western Sahara. Finally, it relies on an ‘attack on freedom, whether as regards the collective freedom of the Sahrawi people … or by the failure to respect property, the freedom of movement, freedom of expression, rights of defence and the principle of dignity’.

145    It is true, as the Front Polisario states, that Article 6 TEU provides that the Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights, while under Article 67 TFEU, the Union constitutes an area of freedom, security and justice with respect for fundamental rights and the different legal systems and traditions of the Member States.

146    However, no absolute prohibition derives, either from those provisions or from those of the Charter of Fundamental Rights, which precludes the EU from concluding an agreement with a third State on trade in agricultural products, processed agricultural products, fish and fishery products which may also be applied to a territory controlled by that third State, even though its sovereignty over that territory has not been internationally recognised.

147    The question as to the conditions under which such an agreement may be concluded without infringing the European Union’s obligation to recognise fundamental rights is examined, with the applicant’s other arguments relating to the implementation and compliance by the EU institutions with their discretion, in paragraph 223 et seq. below.

148    Subject to that examination, the third plea must be rejected, in so far as it criticises the Council for infringement of an alleged absolute prohibition on concluding an agreement such as that at issue in the main proceedings.

–       The fourth plea

149    By its fourth plea, the Front Polisario claims that the contested decision should be annulled because it is contrary to the principle of consistency between EU policies laid down in Article 7 TFEU, which states ‘[t]he Union shall ensure consistency between its policies and activities, taking all of its objectives into account’. It argues that the contested decision ‘supports the de facto sovereignty of the [Kingdom of] Morocco over the territory of Western Sahara’ and ‘provides political and financial support to the ‘[Kingdom of] Morocco, which violates UN law and the principle of sovereignty’, even though no European State has recognised the sovereignty of the Kingdom of Morocco over Western Sahara and although the EU has been granted observer status at the UN.

150    Therefore, the Front Polisario takes the view that the ‘principle of consistency’ prohibits the European Union from adopting measures which have the direct effect of violating the right to self-determination, even though the Member States respect that right, by refusing to recognise the sovereignty of the Kingdom of Morocco over Western Sahara.

151    Finally, the Front Polisario claims that ‘another inconsistency is clear’. It maintains that the European Union ‘cannot sanction certain violations of rights, as it has done for example with regard to Syria while supporting others, especially in relation to peremptory norms’.

152    In its reply, the Front Polisario relies on a ‘third inconsistency by the EU’. It submits that the Commission’s Humanitarian Aid Department grants substantial amounts of aid to Sahrawi refugees settled in camps (see paragraph 16 above) while at the same time, the Council, with the adoption of the contested decision, ‘helps to strengthen the grip of [the Kingdom of] Morocco over Western Sahara and, in short, to create Sahrawi refugees’.

153    It must be stated that Article 7 TEU cannot be used to support the arguments of the Front Polisario. The various policies of the European Union derive from different provisions of the founding treaties and acts adopted pursuant to those provisions. The supposed ‘inconsistency’ of an act with the policy of the European Union in a given area necessarily implies that the act concerned is contrary to a provision, a rule or a principle which governs that policy. That fact alone, if it were established, would be sufficient to lead to the annulment of the act concerned, without it being necessary to rely on Article 7 TEU.

154    In the present case, in order to rely on a breach of the principle of consistency, the Front Polisario starts from the premise that the approval by the contested decision of the agreement at issue between the European Union and the Kingdom of Morocco ‘supports’ the ‘sovereignty’ of the latter over Western Sahara. That premise is, however, incorrect: since no clause having such an effect appears in the agreement concerned and the mere fact that the European Union allows the application of the terms of the agreement by the Kingdom of Morocco to agricultural or fishery products exported to the European Union from the part of the territory of Western Sahara it controls, or to products which are imported into that territory does not amount to recognition of Moroccan sovereignty over that territory.

155    As regards the argument that the European Union infringes ‘UN law’ or peremptory norms, it has no relevance to the alleged infringement of Article 7 TFEU. It simply reiterates the arguments put forward in support of the 10th plea which is examined below.

156    The argument based on the adoption by the European Union of restrictive measures with regard to the situation in other countries is also insufficient to establish a supposed ‘inconsistency’ in European Union policy. It should be recalled, as follows, in particular, from the case-law on restrictive measures adopted with regard to the situation in Syria, the Council has discretion in that matter (see, to that effect, judgment of 13 September 2013 in Makhlouf v Council, T‑383/11, ECR, EU:T:2013:431, paragraph 63). Therefore, it cannot be criticised for inconsistency on the ground that it adopted restrictive measures with regard to the situation in one country and not in another.

157    Finally, as regards the ‘third inconsistency’ mentioned by the Front Polisario in its reply, it must be held that the fact that the European Union provides support to Sahrawi refugees in camps at the same time as it concludes agreements with the Kingdom of Morocco such as those approved by the contested decision, far from constituting an inconsistency in its policy show, to the contrary, that it does not wish to take sides in the dispute between the applicant and the Kingdom of Morocco, while supporting the efforts of the UN towards a just and lasting resolution of that dispute by negotiation.

158    The fourth plea should therefore be dismissed.

–       The fifth plea

159    In support of its fifth plea, the Front Polisario relies on Article 2 TEU, Article 3(5) TEU, Article 21 TEU and Article 205 TFEU. It claims that the contested decision is contrary to the European Union’s fundamental values which govern its external action. It argues that, by approving the conclusion of the agreement referred to by the contested decision, the Council ‘disregards the UN resolutions and the agreement between [the Kingdom of] Morocco and the Front Polisario for the organisation of the referendum on self-determination, encouraging the policy of unlawful annexation by [the Kingdom of] Morocco’. It takes the view that ‘it was sufficient to suspend the agreement’, since the Council ‘[was] perfectly aware that the economic development of [the Kingdom of] Morocco on the territory of Western Sahara [sought] to change the social structures and to subvert the very idea of the referendum’.

160    Article 2 TEU provides:

‘The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.’

161    Article 3(5) TEU states as follows:

‘In its relations with the wider world, the Union shall uphold and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter.’

162    Article 21 TEU, in Title V, Chapter 1 of the EU Treaty thus states:

‘1.      The Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.

The Union shall seek to develop relations and build partnerships with third countries, and international, regional or global organisations which share the principles referred to in the first subparagraph. It shall promote multilateral solutions to common problems, in particular in the framework of the United Nations.

2.      The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in all fields of international relations, in order to:

(a)      safeguard its values, fundamental interests, security, independence and integrity;

(b)      consolidate and support democracy, the rule of law, human rights and the principles of international law;

(c)      preserve peace, prevent conflicts and strengthen international security, in accordance with the purposes and principles of the United Nations Charter, with the principles of the Helsinki Final Act and with the aims of the Charter of Paris, including those relating to external borders;

(d)      foster the sustainable economic, social and environmental development of developing countries, with the primary aim of eradicating poverty;

(e)      encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade;

(f)      help develop international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources, in order to ensure sustainable development;

3.      …

The Union shall ensure consistency between the different areas of its external action and between these and its other policies. The Council and the Commission, assisted by the High Representative of the Union for Foreign Affairs and Security Policy, shall ensure that consistency and shall cooperate to that effect.’

163    Finally, Article 205 TFEU, which appears in Part Five of the TFEU, entitled ‘General Provisions on the Union’s External Action’, provides that ‘[t]he Union’s action on the international scene, pursuant to this Part, shall be guided by the principles, pursue the objectives and be conducted in accordance with the general provisions laid down in Chapter 1 of Title V of the [EU] Treaty’.

164    According to the case-law, the EU institutions enjoy a wide discretion in the field of external economic relations which covers the agreement referred to by the contested decision (see, to that effect, judgment of 6 July 1995 in Odigitria v Council and Commission, T‑572/93, ECR, EU:T:1995:131, paragraph 38).

165    Consequently, it cannot be accepted that it follows from the ‘values on which the European Union is based’, or the provisions relied on by the Front Polisario in the present plea, that the conclusion by the Council of an agreement with a third State which may be applied in a disputed territory is, in all cases, prohibited.

166    For the rest, the question of the exercise by the Council of the wide discretion accorded to it by the case-law cited in paragraph 164 above, and the relevant evidence which must be taken into consideration in that context, will be examined below (see paragraph 223 et seq.).

167    Subject to that examination, the fifth plea must be rejected.

–       The sixth plea in law

168    By the sixth plea, the applicant argues that the contested decision is contrary to the objective of sustainable development ‘since it enables the occupying power to intensify the exploitation of the natural resources of an independent people’. In that regard, it refers to Article 11 TFEU, according to which ‘[e]nvironmental protection requirements must be integrated into the definition and implementation of the Union policies and activities, in particular with a view to promoting sustainable development’. It also relies on several documents of the UN and the Food and Agriculture Organisation of the United Nations (FAO).

169    The applicant adds that the Kingdom of Morocco ‘conducts a policy of annexation, managing the affairs of Western Sahara through its Ministry of the Interior and refusing … to give any account of its administration to the UN’. The Front Polisario infers from that that the contested decision ‘not only … deprives the Sahrawi people of its right to development, but it encourages a policy of economic spoliation, intended chiefly to destroy Sahrawi society’.

170    In its reply, the Front Polisario adds that ‘large companies controlled by Morocco are exploiting the resources [of Western Sahara] with the express intention of robbing the Sahrawi people in order to strengthen the Moroccan economy and to consolidate the annexation by Morocco’.

171    At this stage, it suffices to observe that it does not follow from the allegations of the Front Polisario set out above, or the provisions it relies on, that the Council is subject to an absolute prohibition on concluding an agreement with a third State which may be applied on a disputed territory.

172    Therefore, in so far as that must be understood as claiming the breach of such a prohibition, it must be rejected. For the remainder, Front Polisario’s arguments must be examined in the analysis of the question concerning the exercise by the Council of its discretion (see paragraph 223 et seq. below).

–       The seventh plea in law

173    According to the title adopted by the applicant, the seventh plea is based on the ‘incompatibility of the [contested] decision with the principles and objectives of the external action of the Union in the field of development cooperation’. The applicant refers to Article 208(2) TFEU, which states that ‘[t]he Union and the Member States shall comply with the commitments and objectives they have approved in the context of the United Nations and other competent international organisations’. It also relies on Article 220 TFEU (see paragraph 129 above).

174    Specifically, the Front Polisario observes that ‘the wording of Article [208(2) TFEU], which uses the word “approved”, provides the basis for enforceability against the European Union of the commitments and objectives set out in [UN] resolutions, including the Millennium Declaration and the resolutions which it assisted in drafting’.

175    It must be stated that from the applicant’s argument, as set out in paragraph 174 above, it is impossible to understand what it criticises the Council for and on what ground the contested decision is contrary ‘to the principles and objectives of the European Union’s external action’ or UN documents including the Millennium Declaration. Therefore, the present plea in law must be rejected as inadmissible.

–       The eighth plea in law

176    The eighth plea in law alleges a breach of the principle of the protection of legitimate expectations. After recalling the relevant case-law, the Front Polisario claims that it had legitimate grounds for believing that the European Union and its institutions respected international law.

177    As the applicant itself states, it is settled case-law that the right to rely on the principle of the protection of legitimate expectations extends to any individual who is in a situation in which it is clear that the European Union authorities have given him precise assurances, thereby causing him to entertain justified expectations. Regardless of the form in which it is communicated, information that is precise, unconditional and consistent which comes from an authorised and reliable source constitutes such assurance. However, a person may not plead breach of the principle unless he has been given precise assurances by the administration (see judgment of 19 November 2009 in Denka International v Commission, T‑334/07, ECR, EU:T:2009:453, paragraph 148 and the case-law cited).

178    In the present case, it must be stated that the applicant does not mention any specific assurance given to it by the administration of the European Union as to its conduct in the matter, so that the present plea, based on breach of the principle of the protection of legitimate expectations, cannot be accepted. The argument, in substance, that the contested decision infringes international law must be examined in the context of the analysis of the 11th plea, which specifically alleges the infringement of international law.

–       Preliminary considerations relating to the impact of international law

179    Since the Front Polisario relies both on the infringement of several international agreements concluded by the European Union (9th plea) and the infringement of ‘general international law’ (10th plea), the findings which follow are relevant for the determination of the lawfulness of a European Union act in the light of international law.

180    As is clear from Article 3(5) TEU, the European Union is to contribute to the strict observance and the development of international law. Consequently, when it adopts an act, it is bound to observe international law in its entirety, including customary international law, which is binding upon the institutions of the European Union (see judgment of 21 December 2011 in Air Transport Association of America and Others, C‑366/10, ECR, EU:C:2011:864, paragraph 101 and the case-law cited).

181    Furthermore, in conformity with the principles of international law, EU institutions which have power to negotiate and conclude an international agreement are free to agree with the third States concerned what effect the provisions of the agreement are to have in the internal legal order of the contracting parties. Only if that question has not been settled by the agreement does it fall to be decided by the competent Courts of the European Union, in the same manner as any question of interpretation relating to the application of the agreement in the European Union (see judgment in Air Transport Association of America and Others, cited in paragraph 180 above, EU:C:2011:864, paragraph 49 and the case-law cited).

182    It must also be recalled that, by virtue of Article 216(2) TFEU, where international agreements are concluded by the European Union they are binding on its institutions, and consequently they prevail over acts of the European Union. It follows that the validity of an act of the European Union may be affected by the fact that it is incompatible with such rules of international law (see judgment in Air Transport Association of America and Others, cited in paragraph 180 above, EU:C:2011:864, paragraphs 50 and 51 and the case-law cited).

183    However, first of all, the Court of Justice also held that the European Union was to be bound by those rules (see judgment in Air Transport Association of America and Others, cited in paragraph 180 above, EU:C:2011:864, paragraph 52 and the case-law cited).

184    Next, it held that a Court of the European Union can examine the validity of an act of EU law in the light of an international treaty only where the nature and the broad logic of the latter do not preclude this (see judgment in Air Transport Association of America and Others, cited in paragraph 180 above, EU:C:2011:864, paragraph 53 and the case-law cited).

185    Finally, where the nature and the broad logic of the treaty in question permit the validity of the act of EU law to be reviewed in the light of the provisions of that treaty, it is also necessary that the provisions of that treaty which are relied upon for the purpose of examining the validity of the act of EU law appear, as regards their content, to be unconditional and sufficiently precise. Such a condition if fulfilled where the provision relied upon contains a clear and precise obligation which is not subject, in its implementation or effects, to the adoption of any subsequent measure (see judgment in Air Transport Association of America and Others, cited in paragraph 180 above, EU:C:2011:864, paragraphs 54 and 55 and the case-law cited).

186    Account must be taken of the foregoing in the examination below of pleas 9 to 11.

–       The ninth plea in law

187    By the ninth plea, the applicant claims that the contested decision must be annulled ‘because it is incompatible with several international agreements binding upon the European Union’.

188    First, the applicant relies on the Association Agreement with Morocco and, in particular, its preamble, which refers to observance of the principles of the UN Charter, and Article 2 thereof, according to which respect for the democratic principles and fundamental human rights are to inspire domestic and external policies of the European Union and of Morocco and are to constitute an essential element of that agreement.

189    According to the applicant, the contested decision is contrary to those principles since it ‘infringes the right to self-determination and the rights which derive from that, in particular, sovereignty over natural resources and the primacy of the interests of the inhabitants of Western Sahara’. The applicant adds that ‘[the Kingdom of] Morocco violates the right to self-determination which is the condition sine qua non of the respect for human rights and political and economic freedom’ and refers again to the ‘annexationist policy of [the Kingdom of] Morocco which ‘seeks to prevent the organisation of a referendum on self-determination’.

190    Second, the applicant relies on the UN Convention on the Law of the Sea, signed in Montego Bay on 10 December 1982 (‘the Montego Bay Convention’), which entered into force on 16 November 1994 and was approved on behalf of the European Union by Council Decision 98/392/EC of 23 March 1998 concerning the conclusion by the European Community of the United Nations Convention of 10 December 1982 on the Law of the Sea and the Agreement of 28 July 1994 relating to the implementation of Part XI thereof (OJ 1998 L 179, p. 1). It claims that, in accordance with the provisions of the Montego Bay Convention, the people of Western Sahara have sovereign rights over the waters adjacent to the coast of Western Sahara. As the ‘occupying power’, the Kingdom of Morocco should exercise the rights of the people of Western Sahara observing the principle of the primacy of their interests. However, it systematically disregards those rules and uses control of the sea in order to maintain its presence in Western Sahara. By the contested decision, the Council infringes ‘those provisions’ as, by ‘further liberalising trade in fishery products with Morocco, [it] supports Morocco, which wrongfully exercises rights over that part of the sea’. The applicant adds that the Kingdom of Morocco ‘exploits those waters in its own exclusive interest, for quick profits and in order to create an economic context which makes it more difficult to hold a referendum on self-determination’.

191    Third, the applicant relies on the infringement of the ‘basic criterion’, which it claims results from the Montego Bay Convention, of the Association Agreement with Morocco and Protocol 4 of the Fisheries Partnership Agreement between the European Community and the Kingdom of Morocco, approved on behalf of the Community by Council Regulation (EC) No 764/2006 of 22 May 2006 (OJ 2006 L 141, p. 1) and of the Agreement in the form of an exchange of letters concerning the provisional application of the Agreement on cooperation in the sea fisheries sector between the European Community and the Kingdom of Morocco initialled in Brussels on 13 November 1995, approved on behalf of the Community by Council Decision 95/540/EC of 7 December 1995 (OJ 1995 L 306, p. 1).

192    According to the applicant, ‘in order to determine the scope of the various agreements which bind [the Union] and its Member States and the [Kingdom of] Morocco, the [Montego Bay] Convention constitutes the relevant reference and it unequivocally defines that scope as being the territory of [the Kingdom of] Morocco’.

193    Regardless of whether the various agreements and conventions mentioned by the applicant may, in the light of the case-law cited in paragraphs 184 and 185 above, be taken into consideration for the purposes of the examination of the validity of an act of the European Union, it must be stated that, with the exception of the Montego Bay Convention, the other agreements relied on by the applicant are agreements concluded between the European Union and the Kingdom of Morocco, namely the same parties which concluded the agreement approved by the contested decision. One of those agreements is the Association Agreement with Morocco that the agreement referred to by the contested decision specifically aims to amend.

194    In those circumstances, even assuming that certain clauses of the agreement, the conclusion of which was approved by the contested decision, conflict with the clauses of earlier agreements concluded between the European Union and the Kingdom of Morocco and relied on by the applicant, that does not constitute any illegality, since the European Union and the Kingdom of Morocco are free at any moment to alter agreements concluded between them by a new agreement, such as that concerned by the contested decision.

195    As regards the Montego Bay Convention, it must be recalled that, as the Court of Justice held, the nature and the broad logic of that convention prevent the Courts of the European Union from being able to assess the validity of an EU measure in the light of that convention (judgment of 3 June 2008 in Intertanko and Others, C‑308/06, ECR, EU:C:2008:312, paragraph 65).

196    However, the applicant relies on that convention in order to allege, in substance, that the fishery products originating from the waters adjacent to the coast of Western Sahara are natural resources belonging to it.

197    In that connection, it has already been observed that the agreement, the conclusion of which was approved by the contested decision, also applies to Western Sahara and to the products originating from that territory and its natural resources, whatever those resources and regardless of whether or not they must be determined in accordance with the Montego Bay Convention.

198    However, nothing in the arguments put forward by the applicant in the present plea establish that the conclusion by the Council of an agreement with a non-member State concerning a disputed territory is prohibited in all cases.

199    Therefore, in so far as the present plea in law must be understood as claiming the infringement of such an absolute prohibition, it must be rejected. If the applicant’s arguments, or some of them, must be understood as claiming a manifest error of assessment by the Council, it is sufficient to recall that the question of the exercise by the Council of its discretion in that area is examined in paragraph 223 et seq. below.

–       The 10th plea in law

200    By its 10th plea in law, the Front Polisario claims that the contested decision should be annulled because it is contrary to the right to self-determination, a peremptory norm of international law, and the rights which derive from it. It alleges that the contested decision supports the Kingdom of Morocco in its policy of occupation and ‘economic colonisation’ of Western Sahara.

201    The Front Polisario also asserts that the contested decision creates obligations to which it has not consented, contrary to the relative effect of treaties. It adds that the European Union is required to respect ‘international humanitarian law’ which, it claims, fall within the provisions of the regulation annexed to the Convention on Laws and Customs of War on Land signed at The Hague on 18 October 1907, the Geneva Convention Relative to the Protection of Civilian Persons in Time of War signed at Geneva on 12 August 1949 and the Rome Statute of the International Criminal Court, signed at Rome on 17 July 1998. It asserts that, by adopting the contested decision, the Council ‘allows the Kingdom of Morocco to consolidate its policy of colonisation of Western Sahara, from the economic perspective’.

202    First of all, it must be held that nothing in the contested decision or in the agreement the conclusion of which was approved by it, involves the recognition by the European Union of Moroccan claims over Western Sahara. The mere fact that the agreement at issue also applies to products exported from or imported into, the part of Western Sahara controlled by the Kingdom of Morocco does not amount to such recognition.

203    Regarding the argument based on the relative effect of treaties, contrary to the Front Polisario’s claims, the agreement concerned by the contested decision, although it is of direct and individual concern to the applicant, does not involve any commitment on its part since that measure applies only to the part of Western Sahara under Moroccan control and for as long as that control continues. Should the case arise, if, after the planned referendum on self-determination, the Front Polisario were to extend its control over the whole of the territory of Western Sahara, it is clear that it would not be bound by the provisions of the agreement at issue which was concluded between the Kingdom of Morocco and the European Union.

204    As regards the argument based on the infringement of humanitarian law, it must be held that the applicant’s arguments are very brief and do not explain how and in what ways the conclusion of the agreement referred to by the contested decision infringes that law.

205    In general, nothing in the arguments or evidence put forward by the applicant proves the existence of a rule of customary international law which prohibits the conclusion of an international treaty which may be applied on a disputed territory.

206    The question was referred to the International Court of Justice, but it did not rule on that issue in its judgment in the case on East Timor (Portugal v Australia, ICJ Reports 1995, p. 90) on the ground that to adjudicate on that dispute it would have to rule upon the lawfulness of Republic of Indonesia’s conduct in the absence of that State’s consent (judgment in Portugal v Australia, paragraph 35).

207    The applicant has also produced a letter dated 29 January 2002, addressed to the President of the Security Council by the Under-Secretary-General for Legal Affairs and UN Legal Counsel, in response to a request from the members of the Security Council for his opinion on the lawfulness of the decisions taken by the Moroccan authorities concerning the offer and signature of contracts for the prospection of mineral resources in Western Sahara made with foreign companies.

208    In that letter, the UN Legal Counsel reviewed the rules of international law, the case-law of the International Court of Justice, and the practice of the States as regards that matter. In particular he made the following observations in paragraph 24 of his letter:

‘The recent State practice, though limited, is illustrative of an opinio juris on the part of both … Powers [administering a territory] and third States: where resource exploitation activities are conducted in Non-Self-Governing Territories for the benefit of the peoples of those Territories, on their behalf or in consultation with their representatives, they are considered compatible with the [United Nations] Charter obligations of the administering Power and in conformity with the General Assembly resolutions and the principle of “permanent sovereignty over natural resources” enshrined therein.’

209    On that basis he gave the following answer to the question referred to him:

‘While the specific contracts which are the subject of the Security Council’s request are not in themselves illegal, if further exploration and exploitation activities were to proceed in disregard of the interests and wishes of the people of Western Sahara, they would be in violation of the principles of international law applicable to mineral resource activities in Non-Self-Governing Territories’ (paragraph 25 of his letter).

210    It follows that the UN Legal Counsel did not consider that the conclusion of an international agreement which may be applied to a disputed territory was, in all cases, prohibited by international law.

211    Consequently, in so far as the present plea must be understood as claiming the infringement by the Council of a rule of ‘general international law’ from which there derives an absolute prohibition on concluding international agreements which may be applied on a disputed territory, it must be rejected. In so far as the arguments put forward by the applicant in the context of the present plea concern the exercise by the Council of its discretion, they will be examined in paragraph 223 et seq. below.

–       11th plea in law

212    In its 11th and final plea in law, the applicant relies on various provisions of draft articles on the responsibility of international organisations for internationally wrongful acts, as adopted in 2011 by the International Law Commission of the UN, in order to argue that by adopting the contested decision the Council renders the European Union liable under international law for an internationally wrongful act.

213    However, that plea in law does not introduce anything new with regard to the applicant’s other arguments. It must be recalled that the present action is an action for annulment and not an action for damages. The issue is not whether the European Union has incurred non-contractual liability by adopting the contested decision, which presupposes that that decision is vitiated with illegality. The issue is whether in fact the contested decision is vitiated with illegality. On that point the applicant does not put forward any new argument, but merely repeats the allegations which are, in essence, that, by concluding the agreement approved by the contested decision on behalf of the European Union, the Council has infringed international law.

214    Therefore, that plea must be dismissed.

–       Findings on the existence of an absolute prohibition on the conclusion of international agreements applicable on a disputed territory

215    It follows from all of the foregoing considerations that nothing in the applicant’s pleas and arguments supports the finding that, under EU law or international law, the conclusion of an agreement with a third State which may be applied on a disputed territory is absolutely prohibited.

216    The case-law of the General Court also confirms that finding.

217    The General Court has had to rule on the issue of the lawfulness of an international agreement concluded between the European Union and a third State which was also likely to be applied on a disputed territory in the case which gave rise to the judgment in Odigitria v Council and Commission, cited in paragraph 164 above (EU:T:1995:131).

218    That judgment concerned an action for damages brought by a company which owned a fishing vessel flying the Greek flag which had been boarded by the authorities of Guinea-Bissau on the ground that it was fishing without a licence in that State’s maritime area. In fact, the vessel concerned had a fishing licence issued by the Senegalese authorities, but it was fishing in waters claimed to belong to the respective maritime areas of both the Republic of Senegal and the Republic of Guinea-Bissau. The European Economic Community, as it was at the time, had concluded fishing agreements with both of those non-member States concerning the whole of their maritime areas in both cases. The applicant in that case sought compensation from the Community, for the harm it claimed to have suffered on account of the boarding of its vessel and, in that context, relied on the alleged unlawfulness of the failure to exclude from the scope of the fishing agreements concluded between the Community and each of the two non-member States concerned the area which was the subject of the dispute between them (judgment in Odigitria v Council and Commission, cited in paragraph 164 above, EU:T:1995:131, paragraphs 1 to 13 and 25).

219    The General Court held that that omission did not constitute an illegality. In substance, it concluded that in the exercise of their wide discretion in the fields of external economic relations and the common agricultural policy (including fishing) the EU institutions could, without committing a manifest error of assessment, decided that it was not necessary to exclude the zone in question from the fishing agreements concluded with the two States mentioned above, despite the dispute between them as regards the waters claimed to be part of their maritime areas (see, to that effect, judgment in Odigitria v Council and Commission, cited in paragraph 164 above, EU:T:1995:131, paragraph 38).

220    Thus, by contrary inference from the judgment in question, the conclusion of an agreement between the European Union and a non-member State which may be applied on a dispute territory is not, in all cases, contrary to EU law or international law with which the European Union must comply.

221    If that were the case, the General Court could not have referred, in paragraph 38 of the judgment in Odigitria v Council and Commission, cited in paragraph 164 above (EU:T:1995131), to the discretion of the EU institutions with regard to the question whether or not it was appropriate to include the area subject to the dispute between the Republic of Senegal and the Republic of Guinea-Bissau in the scope of the fishing agreements concluded with those two States. If such inclusion were, in all cases, contrary to EU law or international law that the EU institutions are bound to observe, it is clear that they would not have any discretion as regards that matter.

222    It must also be recalled that there is also nothing in the findings in the letter of the UN Legal Counsel, mentioned in paragraphs 207 to 210 above, to support an absolute prohibition on concluding an agreement concerning a disputed territory. The UN Legal Counsel stated essentially that, only where the exploitation of the natural resources of Western Sahara were to proceed ‘in disregard of the interests and wishes of the people’ of that territory, that it ‘would be in violation of the principles of international law’.

 The discretion of the EU institutions and the factors they must take into account

223    In light of all of the foregoing considerations, and as is clear from the case-law set out in paragraph 164 above, it must be concluded that the EU institutions enjoy a wide discretion as regards whether it is appropriate to conclude an agreement with a non-member State which will be applied on a disputed territory.

224    To allow them such discretion appears even more justified, as is clear moreover from the UN Legal Counsel’s letter mentioned above, because the rules and principles of the international law applicable in the area are complex and imprecise. It follows that judicial review must necessarily be limited to the question whether the competent EU institution, in this case the Council, by approving the conclusion of an agreement such as that approved by the contested decision, made manifest errors of assessment (see, to that effect, judgment of 16 June 1998 in Racke, C‑162/96, ECR, EU:C:1998:293, paragraph 52).

225    That being the case, in particular where EU institution enjoys a wide discretion, in order to verify whether it has committed a manifest error of assessment, the Courts of the European Union must verify whether it has examined carefully and impartially all the relevant facts of the individual case, facts which support the conclusions reached (judgments of 21 November 1991 in Technische Universität München, C‑269/90, ECR, EU:C:1991:438, paragraph 14, and 22 December 2010 Gowan comércio Internacional e Servios, C‑77/09, ECR, EU:C:2010:803, paragraph 57).

226    As stated in paragraph 125 above, in substance, the Front Polisario criticises the Council specifically for failing to examine the relevant facts of the case before the adoption of the contested decision, especially as regards the possible application of the agreement, the conclusion of which was approved by the contested decision, to Western Sahara and to the goods exported from that territory.

227    In that connection, although it is true, as stated in paragraph 146 above, that it does not follow from the Charter of Fundamental Rights, relied on by the applicant in its third plea, that the European Union is subject to an absolute prohibition on concluding an agreement which may be applicable on disputed territory, the fact remains that the protection of fundamental rights of the population of such a territory is of particular importance and is, therefore, a question that the Council must examine before the approval of such an agreement.

228    In particular, as regards an agreement to facilitate, inter alia, the export to the European Union of various products originating in the territory concerned, the Council must examine, carefully and impartially, all the relevant facts in order to ensure that the production of goods for export is not conducted to the detriment of the population of the territory concerned, or entails infringements of fundamental rights, including, in particular, the rights to human dignity, to life and to the integrity of the person (Articles 1 to 3 of the Charter of Fundamental Rights), the prohibition of slavery and forced labour (Article 5 of the Charter of Fundamental Rights), the freedom to choose an occupation and right to engage in work (Article 15 of the Charter of Fundamental Rights), the freedom to conduct a business (Article 16 of the Charter of Fundamental Rights), the right to property (Article 17 of the Charter of Fundamental Rights), the right to fair and just working conditions and the prohibition of child labour and protection of young people at work (Articles 31 and 32 of the Charter of Fundamental Rights).

229    The findings of the UN Legal Counsel as to the obligations deriving from international law, as summarised in paragraphs 208 and 209 above, lead to the same conclusion.

230    In that connection, the Council argues that ‘the fact of having concluded an agreement with a non-member State does not and cannot make the European Union liable for any actions committed by that county, whether or not they correspond to infringements of fundamental rights’.

231    That argument is correct, but it ignores the fact that, if the European Union allows the export to its Member States of products originating in that other country which have been produced or obtained in conditions which do not respect the fundamental rights of the population of the territory from which they originate, it may indirectly encourage such infringements or profit from them.

232    That consideration is all the more important in the case of a territory like Western Sahara which is in fact administered by a non-member State, in this case the Kingdom of Morocco, although it is not included in the recognised international frontiers of that non-member State.

233    Account must also be taken of the fact that the Kingdom of Morocco does not have any mandate granted by the UN or by another international body for the administration of that territory, and it is common ground that it does not transmit to the UN information relating to that territory, such as those provided for by Article 73(e) of the UN Charter.

234    That article provides as follows:

‘Members of the United Nations which have or assume responsibilities for the administration of territories whose peoples have not yet attained a full measure of self-government recognise the principle that the interests of the inhabitants of these territories are paramount, and accept as a sacred trust the obligation to promote to the utmost, within the system of international peace and security established by the present Charter, the well-being of the inhabitants of these territories, and, to this end:

(e)      to transmit regularly to the Secretary-General for information purposes, subject to such limitation as security and constitutional considerations may require, statistical and other information of a technical nature relating to economic, social, and educational conditions in the territories for which they are respectively responsible other than those territories to which Chapters XII [relating to the International Trusteeship System] and XIII [relating to the Trusteeship Council] apply.’

235    The failure by the Kingdom of Morocco to transmit the information provided for by Article 73(e) of the UN Charter with regard to Western Sahara is, at the very least, likely to give rise to doubt as to whether the Kingdom of Morocco recognises the principle of the primacy of the interests of the inhabitants of that territory and the obligation to promote to the utmost their wellbeing, as laid down in that article. Further, it is clear from the file and, in particular, the text produced by the applicant, a speech given by the King of Morocco on 6 November 2004, that the Kingdom of Morocco considers Western Sahara to be part of its territory.

236    The Council contends that none of the provisions of the contested decision or the agreement approved by it ‘lead to the conclusion that the exploitation of the resources of Western Sahara is conducted to the detriment of that territory or prevent the [Kingdom of] Morocco from guaranteeing that the exploitation of natural resources is carried out for the benefit of Western Sahara and in their interest’.

237    It is true that the Front Polisario has not criticised the Council for having included terms in the contested decision which could lead to the exploitation of the resources of Western Sahara to the detriment of its inhabitants.

238    However, as pointed out in paragraph 231 above, the export to the European Union of products originating, in particular, from Western Sahara is facilitated by the agreement at issue. In fact, that is one of the objectives of that agreement. Accordingly, if it were the case that the Kingdom of Morocco was exploiting the resources of Western Sahara to the detriment of its inhabitants, that exploitation could be indirectly encouraged by the conclusion of the agreement approved by the contested decision.

239    As regards the argument that the Kingdom of Morocco is not prevented by the terms of the agreement from guaranteeing that the exploitation of the natural resources of Western Sahara is to be carried out for the benefit of its inhabitants, it suffices to note that neither does the agreement guarantee an exploitation of the natural resources of Western Sahara that is beneficial to its inhabitants. It is entirely neutral in that regard, merely facilitating the export to the European Union of products from Western Sahara, whether or not they originate from exploitation beneficial to its inhabitants.

240    In reality, the Council’s argument shows that, as far as it is concerned, it is solely for the Kingdom of Morocco to ensure that the exploitation of the natural resources is beneficial to the inhabitants of the part of Western Sahara it controls.

241    Given the fact, inter alia, that the sovereignty of the Kingdom of Morocco over Western Sahara is not recognised by the European Union or its Member States, or more generally by the UN, and the absence of any international mandate capable of justifying Moroccan presence on that territory, the Council, in the examination of all the relevant facts of the present case, with a view to exercising its wide discretion as to whether or not to conclude an agreement with the Kingdom of Morocco which may also apply to Western Sahara, should have satisfied itself that there was no evidence of an exploitation of the natural resources of the territory of Western Sahara under Moroccan control likely to be to the detriment of its inhabitants and to infringe their fundamental rights. The Council cannot merely conclude that it is for the Kingdom of Morocco to ensure that no exploitation of that nature takes place.

242    In that regard, it must be observed that the Front Polisario treats the exploitation of natural resources of Western Sahara under Moroccan control as ‘economic spoliation with the aim of altering the structure of Sahrawi society’. It adds that it has informed the UN of its protests concerning the draft agreement approved by the contested decision. Its arguments submitted in the context of the fifth and sixth pleas (see paragraphs 159, 169 and 170 above) are also to the same effect.

243    The Front Polisario also attached to the file a detailed report from its council which contains, inter alia, allegations that, in essence, agricultural holdings in Western Sahara would be controlled by foreign non-native persons and undertakings, exclusively oriented toward export and based on the extraction of water from non-renewable underground reservoirs. In that report reference is made to a report published by a non-governmental organisation which confirms those allegations.

244    It does not follows either from the Council’s arguments or from the evidence that it attached to the file that it carried out an examination such as that mentioned in paragraph 241 above. As regards the Front Polisario’s allegations, set out in paragraphs 242 and 243 above, the Council has not made any specific comment and has not denied them, which suggests that it did not consider whether the exploitation of the natural resources of the part of Western Sahara under Moroccan control was for the benefit of the population of that territory.

245    However, it appears from the evidence relied on by the Front Polisario that those allegations received some publicity and were, in particular, brought to the notice of the UN. Therefore, they could not be ignored by the Council and merited an examination by it as to their likelihood.

246    The Council’s arguments, summarised in paragraphs 230 and 236 above, show, to the contrary, that it regards the issue of whether or not the exploitation of the resources of Western Sahara is carried out to the detriment of the local population only concerns the Moroccan authorities. For the reasons set out in paragraphs 227 to 233 above, that argument cannot be accepted.

247    It follows that the Council failed to fulfil its obligation to examine all the elements of the case before the adoption of the contested decision. Accordingly the action must be upheld and the contested decision must be annulled in so far as it approves the application of the agreement referred to by it to Western Sahara.

248    In the light of that finding, it is unnecessary to rule on the admissibility of the documents mentioned in paragraph 27 above, the consideration of which is unnecessary in the present case.

 Costs

249    Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. In addition, Article 138(1) of the Rules of Procedure states that the institutions which intervened in the proceedings are to bear their own costs.

250    In the present case, the Council and the Commission have been unsuccessful. Although it is true that the Front Polisario sought an order that they pay the costs only in its submissions on the Commission’s statement in intervention (see paragraph 31 above), it must be observed that, according to case-law, it is open to the parties to apply for costs after the application has been lodged, and even at the hearing, if they have not previously done so (see judgment of 14 December 2006 in Mast-Jägermeister v OHIM — Licorera Zacapaneca (VENADO with frame and Others), T‑81/03, T‑82/03 and T‑103/03, ECR, EU:T:2006:397, paragraph 116 and the case-law cited).

251    Accordingly, the Council and the Commission are each ordered to bear their own costs and to pay those incurred by the Front Polisario.

On those grounds,

THE GENERAL COURT (Eighth Chamber)

hereby:

1.      Declares that Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part is annulled in so far as it approves the application of that agreement to Western Sahara;

2.      Orders the Council of the European Union and the European Commission to each bear their own costs and to pay those incurred by the Front populaire pour la libération de la saguia-el-hamra et du rio de oro (Front Polisario).

Gratsias

Kancheva

Wetter

Delivered in open court in Luxembourg on 10 December 2015.

[Signatures]


Asunto T‑512/12

Frente Popular para la Liberación de Saguía el Hamra y Río de Oro
(Frente Polisario)

contra

Consejo de la Unión Europea

«Relaciones exteriores — Acuerdo en forma de Canje de Notas entre la Unión Europea y Marruecos — Liberalización recíproca en materia de productos agrícolas, productos agrícolas transformados, pescado y productos de la pesca — Aplicación del Acuerdo al Sáhara Occidental — Frente Polisario — Recurso de anulación — Capacidad procesal — Afectación directa e individual — Admisibilidad — Conformidad con el Derecho internacional — Obligación de motivación — Derecho de defensa»

Sumario — Sentencia del Tribunal General (Sala Octava) de 10 de diciembre de 2015

1.      Recurso de anulación — Personas físicas o jurídicas — Legitimación — Recurso interpuesto por una entidad que es parte de un conflicto internacional relativo a un territorio no autónomo, pero que no tiene personalidad jurídica a falta de Derecho aplicable a dicho territorio — Admisibilidad

(Art. 263 TFUE, párr. 4)

2.      Recurso de anulación — Personas físicas o jurídicas — Concepto de acto reglamentario — Cualquier acto de alcance general a excepción de los actos legislativos — Decisión del Consejo relativa a la celebración de un acuerdo con un Estado tercero — Exclusión

[Arts. 218 TFUE, ap. 6, letra a), 263 TFUE, párr. 4, y 289 TFUE, ap. 2]

3.      Acuerdos internacionales — Acuerdos de la Unión — Interpretación — Competencia del juez de la Unión — Requisitos — Acuerdos regidos por el Derecho internacional — Aplicación de la Convención de Viena sobre el Derecho de los Tratados — Decisión 2012/497/UE relativa a la celebración de un acuerdo entre la Unión y Marruecos sobre medidas de liberalización en materia agrícola

[Arts. 217 TFUE, 218 TFUE y 267 TFUE, párr. 1, letra b); Decisión 2012/497/UE del Consejo]

4.      Recurso de anulación — Personas físicas o jurídicas — Actos que les afectan directa e individualmente — Afectación directa — Criterios — Decisión del Consejo relativa a la celebración de un acuerdo con un Estado tercero que produce efectos en un territorio en disputa y bajo control de dicho Estado — Recurso interpuesto por un movimiento independentista que participa en las negociaciones auspiciadas por Naciones Unidas para la determinación del estatuto de dicho territorio — Admisibilidad

(Art. 263 TFUE, párr. 4; Decisión 2012/497/UE del Consejo)

5.      Actos de las instituciones — Motivación — Obligación — Alcance — Actos de aplicación general

(Art. 296 TFUE)

6.      Derecho de la Unión Europea — Principios — Derecho de defensa — Derecho a ser oído — Respeto en el marco de los procedimientos legislativos — Requisitos

(Carta de los Derechos Fundamentales de la Unión Europea, art. 41)

7.      Acuerdos internacionales — Acuerdos de la Unión — Celebración — Acuerdo con un Estado tercero que tiene por objeto facilitar la exportación de productos agrícolas y que produce efectos en un territorio en disputa y bajo control de dicho Estado — Obligación de asegurarse de la falta de efectos negativos para la población del territorio de que se trate debido a las actividades de producción de productos destinados a la exportación — Alcance

(Art. 6 TUE; art. 67 TFUE; Decisión 2012/497/UE del Consejo)

8.      Recurso de anulación — Motivos — Motivo basado en una infracción del artículo 7 TFUE relativo a la coherencia de las políticas de la Unión — Motivo inoperante

(Arts. 7 TFUE y 263 TFUE)

9.      Acuerdos internacionales — Acuerdos de la Unión — Celebración — Facultad de apreciación de las instituciones de la Unión — Control jurisdiccional — Límites

(Art. 21 TUE; art. 205 TFUE)

10.    Derecho de la Unión Europea — Principios — Protección de la confianza legítima — Requisitos — Garantías concretas dadas por la administración

11.    Acuerdos internacionales — Acuerdos de la Unión — Efectos de un acuerdo en la Unión a falta de disposición expresa de éste que los prevea — Examen de la validez de un acto de la Unión en relación con las disposiciones de dicho acuerdo — Competencia del juez de la Unión — Requisitos — Examen de la validez de un acto de la Unión a la luz de la Convención sobre el Derecho del mar de 1982 (convención de Montego Bay) — Exclusión

(Arts. 216 TFUE, ap. 2, y 263 TFUE)

12.    Procedimiento judicial — Costas — Inexistencia de pretensiones relativas a las costas en la demanda — Posibilidades de presentar estas pretensiones en una fase posterior

(Reglamento de Procedimiento del Tribunal General, art. 134)

1.      En determinados casos particulares, una entidad que no tenga personalidad jurídica según el Derecho de un Estado miembro o de un tercer Estado puede, no obstante, ser considerada una «persona jurídica», en el sentido del artículo 263 TFUE, párrafo cuarto, y puede admitirse que interponga un recurso de anulación en base a esta disposición. Éste es el caso, concretamente, cuando, en sus actos o actuaciones, la Unión y sus instituciones tratan a la entidad en cuestión como un sujeto individualizado, que puede poseer derechos propios o estar sometido a obligaciones o restricciones. Esto presupone, no obstante, que la entidad en cuestión dispone de estatutos y de una estructura interna que le garanticen la autonomía necesaria para actuar como entidad responsable en las relaciones jurídicas.

Debe considerarse persona jurídica, en el sentido del artículo 263 TFUE, párrafo cuarto, una entidad parte de un conflicto internacional relativo al destino de un territorio no autónomo, que, como tal, se la nombra en los textos correspondientes, incluidas las resoluciones del Parlamento Europeo, y a la que le es imposible constituirse formalmente como persona jurídica del Derecho del territorio no autónomo de que se trata, ya que ese Derecho no existe aún. A este respecto, si bien a esa entidad le sería posible constituirse como persona jurídica con arreglo al Derecho de un tercer Estado, tampoco se le puede exigir que lo haga. Habida cuenta de estas circunstancias tan particulares, dicha entidad puede interponer un recurso de anulación ante el juez de la Unión, en la medida en que sólo puede disponer de personalidad jurídica con arreglo al Derecho del territorio no autónomo de que se trata, que no es, no obstante, en la actualidad, un Estado reconocido por la Unión y sus Estados miembros y carece de Derecho propio.

(véanse los apartados 52, 53, 57, 58 y 60)

2.      El concepto de acto reglamentario en el sentido del artículo 263 TFUE, párrafo cuarto, debe entenderse en el sentido de que incluye todos los actos de carácter general con excepción de los actos legislativos. La distinción entre un acto legislativo y un acto reglamentario se basa, según el Tratado FUE, en el criterio del procedimiento, legislativo o no, seguido para su adopción.

En lo que atañe a una decisión adoptada siguiendo el procedimiento definido en el artículo 218 TFUE, apartado 6, letra a), que prevé que el Consejo, a propuesta del negociador, adopte la decisión de celebración del acuerdo tras la aprobación del Parlamento, este procedimiento responde a los criterios definidos en el artículo 289 TFUE, apartado 2, y constituye, por consiguiente, un procedimiento legislativo especial. Se deduce de ello que la mencionada decisión es un acto legislativo y, por este hecho, no constituye un acto reglamentario.

(véanse los apartados 68, 69, 71 y 72)

3.      Un acuerdo con un tercer Estado celebrado por el Consejo, con arreglo a los artículos 217 TFUE y 218 TFUE, constituye, en lo referente a la Unión, un acto adoptado por una institución de la Unión, en el sentido del artículo 267 TFUE, párrafo primero, letra b). A partir de la entrada en vigor de un acuerdo de este tipo, las disposiciones forman parte integral del ordenamiento jurídico de la Unión y, en el marco de este ordenamiento jurídico, los órganos jurisdiccionales de la Unión son competentes para pronunciarse sobre la interpretación de dicho acuerdo. Sobre este particular, en el caso de un acuerdo celebrado entre dos sujetos de Derecho internacional público, ese acuerdo está regulado por el Derecho internacional, más concretamente, desde la perspectiva de su interpretación, por el Derecho internacional de los tratados. En este marco, las reglas contenidas en la Convención de Viena sobre el derecho de los tratados, de 23 de mayo de 1969, son de aplicación, en la medida en que dichas reglas son la expresión del Derecho consuetudinario internacional general.

En relación con la Decisión 2012/497, relativa a la celebración del Acuerdo en forma de Canje de Notas entre la Unión Europea y el Reino de Marruecos sobre medidas recíprocas de liberalización del comercio de productos agrícolas, productos agrícolas transformados, pescado y productos de la pesca, sustitución de los Protocolos nos 1, 2 y 3 y los anexos de estos Protocolos, y modificación del Acuerdo Euromediterráneo por el que se crea una Asociación entre las Comunidades Europeas y sus Estados miembros, por una parte, y el Reino de Marruecos, por otra, en el marco de una interpretación conforme con el artículo 31 de la Convención de Viena, debe concluirse que el acuerdo cuya celebración se aprobó mediante la Decisión 2012/497, situado en su contexto, se aplica también a la mayor parte de dicho territorio, controlada por el Reino de Marruecos.

(véanse los apartados 89, 90, 92, 98 y 103)

4.      El requisito de que una persona física o moral debe estar directamente afectada por el acto objeto de recurso con arreglo al artículo 263 TFUE implica que se reúnan dos requisitos acumulativos, a saber, que la medida impugnada, en primer lugar, surta efectos directamente en la situación jurídica de la persona afectada y, en segundo lugar, que no deje ninguna facultad de apreciación a los destinatarios encargados de su aplicación, por tener ésta carácter meramente automático y derivarse únicamente de la normativa de la Unión, sin aplicación de otras normas intermedias. A este respecto, en el caso de un recurso contra una decisión relativa a la celebración de un acuerdo internacional por la Unión y sus Estados miembros con un Estado tercero, debe considerare que una disposición de tal acuerdo tiene efecto directo cuando, a la vista de su tenor y de su objeto y naturaleza, contiene una obligación clara y precisa que, en su ejecución o en sus efectos, no se subordina a la adopción de acto ulterior alguno.

En lo que atañe a un recurso contra la Decisión 2012/497, relativa a la celebración del Acuerdo en forma de Canje de Notas entre la Unión Europea y el Reino de Marruecos sobre medidas recíprocas de liberalización del comercio de productos agrícolas, productos agrícolas transformados, pescado y productos de la pesca, sustitución de los Protocolos nos 1, 2 y 3 y los anexos de estos Protocolos, y modificación del Acuerdo Euromediterráneo por el que se crea una Asociación entre las Comunidades Europeas y sus Estados miembros, por una parte, y el Reino de Marruecos, por otra, debe declararse que el acuerdo celebrado en virtud de la Decisión impugnada contiene disposiciones que incluyen obligaciones claras y precisas, no subordinadas, en su ejecución o sus efectos, a la intervención de actos posteriores. Estas disposiciones surten efectos sobre la situación jurídica del conjunto del territorio al que se aplica el acuerdo (y, por tanto, en el territorio de Sáhara Occidental controlado por el Reino de Marruecos), en el sentido de que determinan las condiciones en las que los productos agrícolas y de la pesca pueden exportarse de dicho territorio a la Unión o pueden ser importados de la Unión al territorio en cuestión.

Dichos efectos afectan directamente no sólo al Reino de Marruecos sino también al Frente Polisario, movimiento independentista saharaui, por cuanto el estatuto internacional definitivo de dicho territorio aún no se ha determinado y debe determinarse en el marco de un procedimiento de negociaciones, bajo los auspicios de la Organización de Naciones Unidas (ONU), entre el Reino de Marruecos y, precisamente, el Frente Polisario. Por este mismo motivo, debe considerarse que el Frente Polisario está afectado individualmente por la Decisión 2012/497. En efecto, estas circunstancias constituyen efectivamente una situación de hecho que caracteriza al Frente Polisario respecto de cualquier otra persona y le confiere una cualidad particular. En efecto, el Frente Polisario es el otro interlocutor que participa en las negociaciones llevadas a cabo bajo los auspicios de la ONU, entre éste y el Reino de Marruecos, con miras a la determinación del estatuto internacional definitivo del Sáhara Occidental.

(véanse los apartados 105, 107 a 111 y 113)

5.      Véase el texto de la resolución.

(véanse los apartados 121 y 122)

6.      Véase el texto de la resolución.

(véanse los apartados 132 a 137)

7.      Ni de las disposiciones del artículo 6 TUE ni del artículo 67 TFUE ni de las de la Carta de los Derechos Fundamentales de la Unión Europea se desprende una prohibición absoluta de que la Unión celebre acuerdos con un Estado tercero en lo referente a intercambios económicos en materia de productos agrícolas, productos agrícolas transformados, pescado y productos de la pesca, que sean susceptibles de aplicarse también a un territorio controlado por ese Estado tercero sin que su soberanía sobre dicho territorio sea reconocida internacionalmente. En efecto, la celebración, entre la Unión y un Estado tercero, de un acuerdo que pueda aplicarse en tal territorio no es, en cualquier caso, contraria al Derecho de la Unión o al Derecho internacional, que la Unión debe respetar.

No obstante, si bien es correcto que tal prohibición no se desprende de la Carta de los Derechos Fundamentales, no lo es menos que la protección de los derechos fundamentales de la población de un territorio en disputa reviste una importancia particular y constituye, por consiguiente, una cuestión que el Consejo debe examinar antes de la aprobación de semejante acuerdo. En particular, en lo referente a un acuerdo dirigido a facilitar, concretamente, la exportación a la Unión de diversos productos procedentes del territorio en cuestión, el Consejo debe examinar, detenidamente y con imparcialidad, todos los elementos relevantes para garantizar que las actividades de producción de los productos destinados a la exportación no se lleven a cabo en detrimento de la población del territorio en cuestión ni impliquen violaciones de sus derechos fundamentales incluyendo, en particular, los derechos a la dignidad humana, a la vida y a la integridad de la persona, la prohibición de la esclavitud y del trabajo forzado, la libertad profesional, la libertad de empresa, el derecho a la propiedad, el derecho a las condiciones de trabajo justas y equitativas, la prohibición del trabajo infantil y la protección de los jóvenes en el trabajo.

En efecto, si la Unión permite la exportación a sus Estados miembros de productos procedentes de ese otro país que han sido fabricados u obtenidos en condiciones que no respeten los derechos fundamentales de la población del territorio del que provienen, puede fomentar indirectamente tales violaciones o beneficiarse de ellas. Esta consideración es tanto más importante en el caso de un territorio administrado en la práctica por un Estado tercero a la vez que no está incluido en las fronteras internacionalmente reconocidas de dicho Estado tercero. A este respecto, en circunstancias en las que la soberanía de ese Estado tercero sobre el territorio que administra no está reconocida ni por la Unión y sus Estados miembros, ni, con carácter más general por la Organización de Naciones Unidas, y, a falta de todo mandato internacional que pueda justificar la presencia del mencionado Estado tercero en el territorio de que se trata, el Consejo, en el marco del examen de todos los elementos pertinentes del presente asunto con vistas al ejercicio de su amplia facultad de apreciación referente a la celebración o no del acuerdo con el Estado tercero que pueda aplicarse también al territorio en disputa, debe asegurarse directamente de que no existan indicios de una explotación de los recursos naturales del territorio en disputa bajo control del Estado tercero que pueda realizarse en detrimento de sus habitantes y menoscabar sus derechos fundamentales. No puede limitarse a considerar que le corresponde al mencionado Estado tercero asegurarse de que no se produzca una explotación de esa naturaleza.

(véanse los apartados 146, 220, 227, 228, 231, 232 y 241)

8.      El artículo 7 TUE no puede servir de apoyo a una alegación según la cual un acto de la Unión debe ser anulado porque es contrario al principio de coherencia de las políticas de la Unión previsto en esa disposición. En efecto, las diversas políticas de la Unión corresponden a diferentes disposiciones de los Tratados constitutivos y de los actos adoptados en aplicación de dichas disposiciones. La supuesta incoherencia de un acto con la política de la Unión en un ámbito determinado implica necesariamente que el acto en cuestión sea contrario a una disposición, una norma o un principio que rijan dicha política. La demostración de este simple hecho es suficiente para suponer la anulación del acto en cuestión, sin que sea necesario invocar el artículo 7 TUE.

A este respecto, una alegación basada en la adopción por la Unión de medidas restrictivas respecto de la situación en otros países tampoco basta para demostrar la supuesta «incoherencia» de la política de la Unión, en la medida en que el Consejo dispone de una facultad discrecional de apreciación en la materia. Por tanto, no se le puede reprochar una incoherencia por el hecho de que haya adoptado medidas restrictivas respecto de la situación en un país y no en otro.

(véanse los apartados 153 y 156)

9.      Las instituciones de la Unión gozan, en el ámbito de las relaciones económicas exteriores, de una amplia facultad de apreciación. Sobre este particular, en relación con la cuestión de si procede o no celebrar un acuerdo con un Estado tercero que se aplique a un territorio en disputa, reconocer a las instituciones de la Unión tal facultad se revela tanto más justificado cuanto que las normas y principios del Derecho internacional aplicables en la materia son complejas e imprecisas. De ello se deduce que el control judicial debe limitarse necesariamente a determinar si la institución competente de la Unión, en el presente asunto el Consejo, al aprobar la celebración de un acuerdo como el aprobado mediante la Decisión impugnada, incurrió en errores de apreciación manifiestos. Dicho esto, en particular, en los casos en los que una institución de la Unión dispone de una amplia facultad de apreciación para comprobar si ha cometido un error manifiesto de apreciación, el juez de la Unión debe verificar si ésta examinó, detenidamente y con imparcialidad, todos los elementos relevantes del asunto de que se trate, elementos que deben respaldar las conclusiones extraídas de ellos.

(véanse los apartados 164 y 223 a 225)

10.    Véase el texto de la resolución.

(véase el apartado 177)

11.    Con arreglo a los principios del Derecho internacional, las instituciones de la Unión, competentes para negociar y concluir un acuerdo internacional, pueden concertar con los terceros Estados interesados los efectos que las disposiciones de este acuerdo deben surtir en el ordenamiento jurídico interno de las Partes contratantes. Sólo cuando dicha cuestión no haya sido regulada en el acuerdo, corresponde a los órganos jurisdiccionales competentes de la Unión dirimir esta cuestión, al igual que cualquier otra cuestión de interpretación referida a la aplicación del acuerdo en la Unión.

No obstante, un órgano jurisdiccional de la Unión sólo puede examinar la validez de un acto del Derecho de la Unión en relación con un tratado internacional si la naturaleza y la estructura de éste no se oponen a ello. Cuando la naturaleza y la estructura del tratado de que se trata permiten un control de la validez del acto del Derecho de la Unión en relación con las disposiciones de dicho tratado, es preciso además que las disposiciones de éste invocadas para examinar la validez del acto del Derecho de la Unión sean, desde el punto de vista de su contenido, incondicionales y suficientemente precisas. Tal requisito se cumple cuando la disposición invocada contiene una obligación clara y precisa que, en su ejecución o en sus efectos, no se subordina a la adopción de acto ulterior alguno.

A este respecto, por lo que se refiere a la Convención de Naciones Unidas sobre el Derecho del mar de 1982 (convención de Montego Bay), de 10 de diciembre de 1982, la naturaleza y el sistema de dicha Convención se oponen a que los órganos jurisdiccionales de la Unión puedan apreciar la validez de un acto de la Unión en relación con ésta.

(véanse los apartados 181, 184, 185 y 195)

12.    Las partes están autorizadas a formular, con posterioridad a la interposición del recurso e incluso en la vista, pretensiones sobre las costas, aun cuando no hubieran presentado tales pretensiones en la demanda.

(véase el apartado 250)

 

 
Action brought on 19 November 2012 – Front Polisario v Council
(Case T-512/12)
Parties
Applicant: Front populaire pour la liberation de la saguia-el-hamra et du rio de oro (Front Polisario) (Laâyoune) (represented by: C.E. Hafiz, lawyer)
Defendant: Council of the European Union
Form of order sought
Annul the contested act and, consequently, all implementing acts
Pleas in law and main arguments
The applicant raises five pleas in law in support of its action against (i) Council Decision 2012/497/EU of 8 March 2012 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Union and the Kingdom of Morocco concerning reciprocal liberalisation measures on agricultural products, processed agricultural products, fish and fishery products, the replacement of Protocols 1, 2 and 3 and their Annexes and amendments to the Euro-Mediterranean Agreement establishing an association between the European Communities and their Member States, of the one part, and the Kingdom of Morocco, of the other part (OJ 2012 L 241, p. 2) and (ii) Commission Implementing Regulation (EU) No 812/2012 of 12 September 2012 amending Council Regulation (EC) No 747/2001 as regards tariff quotas of the Union for certain agricultural and processed agricultural products originating in Morocco (OJ 2012 L 247, p. 7).
The applicant is of the opinion that, as the representative of the Sahrawi people, it is directly and individually affected by those acts.
1.    First plea in law, alleging, first, infringement of the duty to state reasons, when it was particularly necessary to state reasons having regard to the legal environment and, second, infringement of the right to a hearing, since the Front Polisario was not consulted.
2.    Second plea in law, alleging infringement of the fundamental rights protected by Article 67 TFEU, Article 6 TEU and the principles laid down in the case-law by breaching the right to self-determination of the Sahrawi people and by encouraging the policy of annexation followed by the Kingdom of Morocco, an occupying power in the view of the applicant. The applicant also claims infringement of the principle of coherence laid down in Article 7 TFEU by the failure to respect the principle of sovereignty and infringement of the values on which the European Union is based and the principles governing its external action in contravention of Articles 2 TEU, 3(5) TEU, 21 TEU and 205 TFEU.
3.    Third plea in law, alleging infringement of international agreements concluded by the European Union, in particular the Association Agreement concluded between the European Union and the Kingdom of Morocco, and the United Nations Convention on the Law of the Sea.
4.    Fourth plea in law, alleging infringement of a number of norms of international law, including the right to self-determination, the relative effect of the Treaties and the essential provisions of international humanitarian law.
5.    Fifth plea in law, alleging that the contested acts are unlawful, since the illicit nature of the European Union’s conduct under international law makes those acts unlawful.

____________

 

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visa.mastercard.network.fees

November 12, 2024, 13:44 GMT | Insight) — Scrutiny for Mastercard and Visa from the European Commission over shifting card charges for merchants and acquirers includes regulators asking market players whether intervention is needed over “continuous” fee changes, a lack of transparency or difficulties in negotiation.   It emerged earlier this month that the EU antitrust regulator sent questions in August to the two major payment card scheme operators as well as retailers and banks that handle merchants’ payments, drilling into seven years of conduct to see how the fee landscape has changed — and if customers are suffering (see here).   In its detailed questions to market players, seen by MLex, the commission picks apart the various fees that merchants and acquirers pay — from core fees, to non-compliance charges and optional card scheme fees — to see how easy the system is to navigate.    The commission is gathering data on the period from 2016, the first year after the introduction of EU caps on certain fees, up to 2023. Legislation known as the Interchange Fee Regulation, passed in 2015, limited certain charges on debit and credit card transactions, but retailers have long complained that Mastercard and Visa are circumventing the law by raising other charges.   The questionnaires from the EU’s antitrust department seek data on processing fees, scheme fees for acquirers and fees for so-called “market development funds.” The commission wants those to be broken down further to cover mandatory fees, optional fees and fees for not complying with the system rules.   Generally, the commission seems to be looking into whether the fees are lower when Visa and Mastercard face competition in a particular country by a national card scheme.  More specifically, the regulator devotes significant enquiry into how transparent fee structures are. Does the “continuous introduction of the new fees and deletion of existing fees” harm customers, it asks.

Do merchants or acquirers get consulted before fees change and how could the system be made simpler, the commission inquires. Furthermore, are higher fees passed on from acquiring banks to merchants?

Officials dedicate a long line of questioning to fees imposed by card schemes based on certain kinds of behavior or not complying with scheme rules. For example, if merchants agree to enable Click-to-Pay functionality or supply more data on transactions they can benefit from lower fees.   The questions indicate the commission wants more transparency on the level of non-compliance fines and their increases, the justification for their imposition, the process for warning merchants or granting any payment flexibility, and whether retailers can appeal against the fines. Further clarity is sought on “optional fees” and whether they are truly optional for merchants, as well as how retailers can really negotiate fees. “Are individual fees negotiable, or is negotiation taking place on a package of fees including through the granting of rebates or incentives?” the commission asks. 
Retailers have long pushed for action against Visa and Mastercard and today welcomed the investigation.“We have seen how scheme fee increases and the introduction of new scheme fees have increased our costs without it being clear what value or costs are behind them,” said Atze Faas, payments adviser at Eurocommerce.“Ultimately consumers are paying the price for something they and we have no influence on. All that money is flowing to the US, weaking European competitiveness.”   
Both Visa and Mastercard confirmed receipt of questionnaires from the commission in August. They said they were cooperating with the regulator.  While the interchange fee regulation puts a ban on attempts to circumvent its fee caps by raising other fees, EU competition law can also clamp down on certain kinds of loyalty-inducing behavior.   
The commission asks if negotiations on fees are “conditioned” on accepting certain cards or signing up to other services from the scheme. Equally, such terms could exclude other providers, such as a national scheme operator, according to the line of questioning. 
After decades of antitrust investigation, the interchange law from 2015 was designed to set the clear rules of the market for card schemes, capping fees at maximum levels. These limits were then retained after an initial review into the functioning of the law.  
Since then the commission’s scrutiny of payments markets has been low-key, steering clear of antitrust investigation and letting the interchange fee regulation do its job. The intense engagement heralded by the latest round of questions hints that this might be about to change.           Please e-mail editors@mlex.com 


November 1, 2024, 11:10 GMT | Insight) — Mastercard has said it has received a formal request for information from the European Commission as part of a preliminary antitrust probe into “network fees related to acquirers.”  The scrutiny started in August, and Mastercard is cooperating with the regulator, the company said.   Visa also confirmed the commission has sought information from it. “Visa received a request for information from the European Commission in late August. We are currently working through the request to supply the relevant information,” a spokesperson said.   
Mastercard and Visa run payments-card networks that has attracted intense antitrust scrutiny over the years, primarily focused on the charging of “interchange fees” on transactions.    In July, they wrapped up the final strand of antitrust scrutiny into these fees, extending voluntary caps on the charges for non-EU cards deployed within the bloc (see here).    On Thursday, Mastercard disclosed that a month later it received “a formal request for information from the European Commission seeking documents and information in connection with an investigation into alleged anticompetitive behavior of certain card scheme services in the European Union/EEA.”    “The request focuses on Mastercard’s practices regarding network fees related to acquirers. Mastercard is cooperating with the European Commission in connection with the request.”    The Mastercard and Visa payment systems are made up of issuers and acquirers. The latter are usually financial institutions that function as intermediaries between merchants and card payment networks.   Card networks have faced accusations from retail groups that caps on certain “interchange fees” have led to increases in other fees to compensate (see here).    A spokesperson for the commission said: “We can confirm the sending of the request for information. We have no further comment to make, as the investigation is ongoing.”   editors@mlex.com


 

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v. pricing.algorithm.fuel

mlex.summary

November 21, 2024, 17:26 GMT | Insight) — The Brazilian competition authority is investigating Intelprice Soluções de Precificação (Aprix) and the Sindicato do Comércio Varejista de Derivados de Petróleo no Estado de Minas Gerais (Minaspetro) for alleged anticompetitive practices related to a pricing algorithm designed for fuel stations.

The investigation began after the Superintendence of the Administrative Council for Economic Defense, or CADE, took notice of an online article dated Jan. 20, 2021, which highlighted Aprix’s pricing technology. According to the article, the system generates dynamic pricing suggestions based on cost, price and sales volume. 

“The business developed technology for automatic monitoring. Currently, more than 13,000 fuel stations are monitored daily. The system generates dynamic pricing based on price, cost, and volume, and from there, suggests a price to be adopted by the service user,” the article stated.

The authority opened a preliminary proceeding in 2021 and transformed it into an administrative proceeding on Nov. 19, 2024. Aprix and Minaspetro have 30 days to present their defenses.

CADE acknowledges that pricing algorithms can have pro-competitive effects but notes the potential for harm when such technology facilitates coordinated actions among competitors.

“While it is possible that the use of pricing algorithms leads to pro-competitive effects, the boundary of illegality lies in the use of this technology to enable coordinated actions among competitors, thereby artificially raising prices,” CADE explained.

The authority’s analysis will focus on whether the platform fosters uniform pricing behavior among competitors, potentially harming competition.

— CADE’s probe —

The Superintendence looked at Aprix’s advertising materials and public statements by its clients as evidence for the case. Aprix’s marketing emphasizes the benefits of maintaining higher prices to ensure profitability across the sector. 

In a promotional video, the company states: “This is how we prevent our clients from making decisions that might sometimes be better in terms of volume but worse in terms of the profitability of the operation. Moreover, it helps maintain the price level across the sector.”

CADE  interpreted this as a push for higher pricing, saying that Aprix’s guidelines are “beyond ensuring profitability for the client, maintaining higher prices is crucial to avoid an overall drop in price levels across the sector.”

A technical note from CADE’s Department of Economic Studies (DEE) identified statistically significant price increases at fuel stations using Aprix’s platform. The increases ranged between .02 and .03 reais per liter for gasoline and ethanol and .01 and .04 reais per liter for diesel, excluding GNV.

“Competitive concerns regarding the uniform conduct of fuel station networks using Aprix’s platform are heightened in areas where multiple stations utilize the system,” CADE report said.

At an industry event featuring Aprix and Rede Xodó, a client of the platform, potential competition concerns were openly discussed.

“Many joke with Bernardo [Aprix’s representative], saying, ‘Ah, this could be a problem.’ I joke about it too — talking about cartels and so on. But there’s no cartel. Bernardo or Aprix doesn’t control the competitor. We clearly understand that we analyze our station based on decisions competitors make independently. The competitor makes their own decision, and we base ours on what they decided,” said Rede Xodó’s representative.

CADE required explanations about those statements. Aprix’s answers are confidential.

CADE’s preliminary findings suggest that Aprix may be propagating a message discouraging fuel stations from lowering prices, as the company “appears to advocate for maintaining high prices and avoiding a general price drop across the fuel sector.”

— Minaspetro involvement —

CADE reported Minaspetro’s involvement in the case due its then-President Carlos Eduardo statement defending the technology:

“Pricing today is crucial as it determines both sales capture and business results. A wrong pricing decision can undoubtedly lead to bankruptcy. Aprix’s artificial intelligence and pricing system greatly assist in pricing correctly,” he had said.

However, CADE said that promoting “correct pricing” could implicitly encourage fuel stations to adopt Aprix’s system, further standardizing pricing practices and diminishing competition.

Please e-mail editors@mlex.com
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cocoo enforcer of SOUTH.AMER.AFRICA… clp <> WTO

South American leaders face limits in efforts to strengthen competition

The continent’s most active enforcer, Brazil’s Administrative Council for Economic Defense, or CADE, dwarfs other regulators in the region. Eduardo González, president of Paraguay’s National Competition Commission, or Conacom, said limited budgets restrict the ability of his organization to take more aggressive steps to strengthen competition.

The agency’s annual budget, he said recently at a conference,* is valued at $1 million — about a tenth of the resources allocated to CADE.

“I’m ashamed to say that, but it’s our reality,” González said. He praised the work done by his staff, which consists of more than 30 professionals.

CADE’s 2024 budget is about $10.3 million, and the agency’s staff consists of 323 employees. Conacom’s González called CADE a “big brother.”  

— Uruguay autonomy  —

Competition agencies’ dependence on higher authorities has raised concerns in South America.

Uruguay’s Commission for the Promotion and Defense of Competition, or CPDC, is linked to the Ministry of Economy and Finance but has been working in recent years to expand its autonomy, according to CPDC President Alejandra Giuffra, who began her term in 2019.

The Uruguayan competition agency is relatively new, having been created in 2007. Giuffra’s key priority is to implement budgetary autonomy to make CPDC’s action more proactive, she said at the conference. She also supports a revision of the leniency program to make it more comprehensive.

She said her staff is even smaller than the one in Paraguay — only 11 professionals have the daily responsibility to handle antitrust. 

Despite the limitations, Giuffra celebrates the agency’s efforts to investigate and penalize major companies, such as Fábricas Nacionales de Cerveza. The agency imposed a “historic fine” of $4.8 million in 2022 for abuse of power in the beer market, she said.

“The agency’s goal is to take a more proactive approach, rather than a reactive one. We have been working reactively in response to the complaints presented to us,” Giuffra said.

Uruguay is seeking a simplified fast-track form for notification of less complex cases that require less attention from regulators, Giuffra said.  “As an authority with limited resources, we can only take on deals that are truly important,” the CPDC president noted.

— Argentina —

Argentina is working to establish autonomy for its competition agency. A law approved in 2018 would create a successor to the National Commission for Competition Defense, or CNDC, but it has yet to be implemented. 

CNDC currently operates within the Ministry of Productive Development, but it is set to be replaced by the National Competition Authority.

Alexis Pirchio, who became CNDC’s president this year under Javier Milei’s administration, said establishing a new competition agency would enable the country to finally implement an ex-ante merger review system.

 “The agency’s independence implies not only autonomy with regard to the other government areas, but also a bureaucratic simplification that will ease in the finalization of files,” Pirchio said at the conference.

The CNDC budget, estimated at $1.5 to $1.7 million, is a concern for the competition authority president, but even with financial limitations, one of Pirchio’s objectives is to reduce the “great stock” of merger and competition cases that have been delayed.

— Paraguay’s law —

Paraguay’s competition law was instituted in 2013, but it could be modified, said González, whose term ends in 2025. He said “10 or 11 changes ” should be made, but only specifically mentioned approval of a leniency program.
 
González said strengthening Conacom would raise society’s awareness of the importance of competition.

 “I say we must work on an ‘evangelization’ of competition so that people understand how important it is. And it’s not just good for the regulator, but also for the market, consumer and our economy too,” he said.

As with Uruguay’s CPDC, the Paraguayan agency aims to accelerate the analysis of fast-track cases in order to investigate complex deals more thoroughly. González added he expects steps to be taken toward that goal by the end of 2024.

South American authorities are united in their concern over the shortage of competition law courses, which limits the development of professionals with expertise in this area.

Argentina does offer several courses at its colleges. In Uruguay, there are no postgraduate programs available. Paraguay, according to González, is expected to launch its first postgraduate course in competition and regulation in the first half of 2025.

 “Our people have been going to graduate school abroad,” González said.

* “30th International Seminar for Competition Defense,” Ibrac, São Paulo, Brazil, Nov. 6-8.

Please email editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.

 
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DOJ.CMA V GOOGLE/APPLE

mlex.summary:   Big Tech antitrust probes in Spain coordinated with EU Commission, national chief says

 

GOOGLE . EC
 
November 22, 2024, 11:31 GMT | Insight) — Google has proposed making further changes to how it displays search results for products, hotels and other services in a bid to satisfy EU regulators it is complying with a recent ban on self-preferencing, MLex has learned.  
The search giant has briefed some market players as well as EU officials on the changes to how it displays different categories of results and how that impacts users as they progress from Google’s search box to finding a service, MLex understands.   Google is the target of an investigation into whether it is complying with the Digital Markets Act, which orders search engines to treat other services — such as price-comparison sites or hotel-booking platforms — in the same way as it treats its own (see here).The EC is readying formal charges — known as “preliminary findings” — over Google’s suspected non-compliance with the law. The company’s latest proposal is aimed at avoiding such a move by investigators, which would mark an escalation of the dispute and carry the risk of hefty fines.   Google is understood to have said that, unless EU officials bless its approach, it may have to remove all specialized search results in the EU.   The challenge for Google since the start of DMA obligations in March has been appeasing two different groups of users: merchants, hotels and other direct sellers, and specialized search engines that aggregate results from different sources and offer a comparison service.   Its initial changes in March, which provided more visibility to comparison services that competed with Google’s own services, led to a drop of web traffic for some direct sellers of up to 40 percent.   The Digital Markets Act obliges Google to fairly rank such services, and in September it proposed overhauling its compliance by presenting users searching for, say, a hotel room, with two boxes: one containing links to a selection of hotel websites, and the other with a selection of specialized search services comparing different rates.   Now Google is planning to further tweak that solution to further increase the visibility of direct sellers. For example, users clicking on the hotel box would see more links leading directly to the hotel website and fewer leading to websites comparing prices, MLex understands.  “Our proposed solution is fair and benefits both users and the different types of businesses being impacted by the DMA changes, giving people clearer choices between comparison sites and direct supplier sites like hotels,” said Oli Bethell, a director for legal affairs at Google.   “Comparison sites are lobbying for even more changes, including a complete ban on relevant user information in search (like prices and imagery), which would hurt European businesses and consumers, and has no legal base in the DMA.”    Please email editors@mlex.com
 

 
(November 26, 2024, 02:27 GMT | Insight) — Google‘s reliance on a US Supreme Court ruling in an American Express antitrust case as its defense against a federal lawsuit accusing it of monopolizing the advertising technology markets was met with skepticism by a US federal judge today. District Judge Leonie Brinkema said she’s read the 2018 ruling in Ohio v. American Express, which said a two-sided market is a product that can’t make a sale to one side of the platform without simultaneously making a sale to the other.  The Amex case didn’t deal with a dynamic, programmatic exchange between parties, the judge said.  “It’s a completely different set up,” Brinkema said as she interrupted Google lawyer Karen Dunn during closing arguments in the Department of Justice’s lawsuit against Google. Brinkema said the more she reads, the “more problems” she sees in how the two transactions operate.   A key battle between the government and Google in the historic lawsuit, which is being heard in the US Eastern District of Virginia, is over market definition.   Google has relied heavily on the Amex case to argue that the DOJ and a Virginia-led multistate coalition have “gerrymandered” the ad tech market and defined it for three separate components of an ad tech stack:  publishers, advertisers and the ad exchange. However, ad tech tools must be evaluated as a single, two-sided market, according to Google.   Dunn today argued that the adtech market needs to be analyzed as a single two-sided market, because its purpose is to “facilitate matches” between advertisers and individuals viewing ad impressions on digital content.   “We think Amex is completely on point,” she said. “The jointly consumed transaction is the match. It is useless to have a tool on one side of the market. The success of the buyer depends on the success of the seller.”   Dunn said the adtech market and the credit card market are similar,  with a cardholder likened to an advertiser and a merchant like a publisher. They transact to buy an ad impression where ad tech tools are akin to credit cards. Merchant services in a credit card market are like sell-side advertising tools and cardholder services are similar to buy-side advertising tools, she said.

— Three pillars of adtech —

Earlier in the hearing, DOJ attorney Aaron Teitelbaum argued that internal documents show how Google’s three-pillar strategy maps onto the government’s market definition.   “Google’s assertion that open web display advertising is some made up concept for this case is sort of like a zombie that keeps shuffling around despite having been laid to rest by the trial,” he said.   Teitelbaum also attacked Google’s inconsistent position on how to define a product market, saying it directly contradicts an argument the tech giant made to the US District Court for the Northern District of California in another suit in 2021. In its motion-to-dismiss, Google alleged a single relevant product market. The tech giant challenged an ad tech product market definition that combined buy-side and sell-side tools. The California court agreed with that position as a basis for dismissing the private antitrust claim against Google.   Google has repeatedly argued that “open-web display advertising” is not a well-understood defined category, and that there is “open web” and “display” advertising, but both are separate.   Teitelbaum said that if there are two parcels of land, selling one of them isn’t a substitute because the inventory doesn’t go away.  Using another analogy, Teitelbaum said that if a family has both a stove and a microwave, they are not reasonable substitutes but complements.   Brinkema questioned the DOJ attorney, saying that even though the DOJ has spent significant time and effort arguing there are three separate tools and markets, Google counters by saying there is only one adtech stack. She said one of paragraphs in the government’s proposed findings of fact points to there being a two-sided market. The judge asked Teitelbaum to reconcile the two things.  The DOJ attorney replied that the power to control prices and exclude competitors while saddling customers with unwanted features indicates monopoly power.

“They [publishers] can’t go anywhere else because they want access to that mass of advertisers on the other side of the exchange,” Brinkema said. “Will it truly make any difference if the court rules that there are not three separate markets?”

Teitelbaum replied that even if that were to happen, ultimately the DOJ will prevail on the argument that Google has monopoly power. However, the three product markets are not fungible and not reasonable substitutes, he said.   Citing a 2024 ruling by the US Court of Appeals for the Fourth Circuit in Duke Energy Carolinas v NTE Carolinas, the DOJ attorney said it’s foundational that alleged anticompetitive conduct must be considered as a whole because Section 2 of the Sherman Act focuses on anticompetitive conduct and not on court-made subcategories of that conduct.   In their lawsuit, the DOJ and states accuse Google of having “corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.”   The government has targeted two Google acquisitions which it seeks to unravel: the 2008 purchase of DoubleClick, which operated a market-leading publisher ad server, and the 2011 purchase of AdMeld, a leading yield manager (see here).  Today’s closing arguments follow a three-week trial in September (see here).

— Product design, integration —

Today, Dunn also argued that the DOJ challenges its product design decisions because Google didn’t immediately provide rivals “comparable” access to its innovations, infrastructure and customers.  However, Teitelbaum argued that Google’s years of exclusionary conduct to monopolize ad technology markets through acquisitions, customer restrictions and auction manipulations can’t be cast as product-design choices or technical work that immunize the company from antitrust scrutiny.  “The question is whether Google’s technical work harmed competition and coerced customers. They used technical work to harm competition in the first place, so it’s just not the right question to ask,” the DOJ attorney said.  Google has argued that the integration of Google Ads and AdX and the integration of AdX and DFP offers benefits when they are used together.   DoubleClick for Publishers (DFP) is the industry’s leading publisher ad server and has been owned by Google since 2008. It is also referred to as Google Ad Manager.  Google ad exchange, or AdX, matches buyers and sellers of ads, and it controls 56 percent of the global market and 47 percent of the US market.  The judge asked Teitelbaum if he agreed there should be evidence that there was significant advantage to integration. She proposed a hypothetical situation in which Google had a widget that was the “absolute best,” for which customers would pay any amount.  Teitelbaum replied that the tech giant didn’t make the best widget but that Google has pulled a variety of levers to force customers to buy the widget even though they didn’t like it very much,” Teitelbaum said.  Brinkema also found the DOJ’s argument sparse in outlining why Google Ads was so detrimental, and asked the government to elaborate. Teitelbaum said Google Ads is the anticompetitive tie between DFP and AdX and when Google took away pricing floors from different exchanges during ad auctions, it took away publishers’ and advertisers’ ability to make better deals.  “Google is not a defendant in this case because of its size,” the DOJ lawyer said. The government isn’t trying to force sharing or engage in central planning of a product but rather is trying to hold Google accountable for its “rapacious conduct.”

— Chat destruction —

During closing arguments, Dunn said the government hasn’t proved anticompetitive conduct and instead has been picky with sentences from evidence to make its case. Brinkema immediately interjected, saying Google itself has had a problem of keeping “history off” on internal chat communications among employees.  The judge noted that US District Judge Amit Mehta of the District of Columbia — who recently found in a separate DOJ lawsuit that Google illegally monopolized the market for Internet search and search text ads — has said the evidence destruction doesn’t matter, “but it’s out there.”  “You are close to dangerous territory because we don’t know all that [Google employees] were thinking or saying,” Brinkema said. The DOJ and states have filed a motion for adverse inference and sanctions against Google for allegedly having trained its employees to “communicate with care.” The practice of using chats that automatically delete within 24 hours has resulted in staff concealing discoverable communications, the DOJ said. The DOJ also alleged inappropriate uses of attorney-client privilege.   Brinkema previously said that “this record creates a very serious problem for Google,” and opted for a “wait and see” approach on the request for an adverse inference (see here).

Please e-mail editors@mlex.com


Apple outlines defense against UK mobile browser antitrust concerns

Apple said that it rejects in particular the CMA’s findings regarding its Safari browser — which competes with rivals such as Google’s Chrome and Mozilla‘s Firefox — and regarding its browser engine WebKit and “in-app browsing” on its iOS mobile operating system.  
The CMA found, first, that Apple specifies that mobile browsers in the UK must use WebKit, which limits the “extent to which competitors can differentiate their browsers and offer enhanced features to iOS users.” Second, it said Apple has “withheld access or has delayed giving” competing browsers using WebKit the same level of access and functionality as Safari — which it said accounts for 88 percent of mobile browsers on iOS in 2024.   The CMA also pointed to concerns over in-app browsing, where web content is displayed while a user is still inside another app, for example, a social media or online marketplace service.    MLex understands that some of Apple’s core defense arguments focus on user choice of third-party browser options through the App Store, which, the company argues, compete with Safari. Apple argues that this choice architecture, built into its operating system policies, offers competitive dynamics. In addition, Apple also focuses on the ability of users to change the default browser through iPhone settings. 
Apple is also focusing its rebuttal arguments on the operation and role of WebKit in iOS, MLex understands. It will argue that the engine is an open-source web content code generator for all browsers and applications, and one that implements key security and privacy technologies for web browsing on iOS devices. Apple’s arguments to the UK regulator also include that WebKit offers user benefits through performance metrics such as power efficiency. 
  
— Apple focus and market concerns —

Mobile browser markets are “not working well for UK businesses and millions of phone users,” the CMA said in its findings. “Apple’s policies are holding back innovation in the browsers we use to access the web on mobile phones,” it said. “Most concerns that have been identified relate to Apple’s policies.”    It said Apple’s rules “restrict other competitors from being able to deliver new, innovative features” that could benefit consumers. Other browser providers, it said, have highlighted concerns that they have been “unable to offer a full range of browser features, such as faster webpage loading on iPhone.”   “We have heard widespread, detailed and compelling evidence that the rules Apple sets due to its control of the iOS operating system limit the ability of mobile browsers other than Apple’s Safari to provide more innovative, differentiated features,” the CMA said.   In addition, the enforcer provisionally found that a revenue-sharing agreement between Google and Apple significantly reduces financial incentives to compete in mobile browsers on Apple’s iOS mobile operating system.

the CMA said third-party browsers and browser engines have “struggled to gain significant footholds” in the relevant markets, as shown by low shares of supply. It also said there are low levels of switching between browsers, with just 16 percent of UK users having downloaded a different mobile browser from the one which came pre-installed with their phone. 
editors@mlex.com


 
mercado.livre v apple
 

(November 26, 2024, 01:03 GMT | Insight) — The Brazilian Administrative Council for Economic Defense has granted partial approval of Mercado Livre’s preventive measure directed at Apple’s App Store policies, saying the policies create barriers to competition in the iOS ecosystem.   CADE ordered Apple to cease applying restrictive clauses in its Apple Developer Program License Agreement and App Store Review Guidelines.  In December 2022, Mercado Libre Argentina filed complaints in Brazil and Mexico accusing Apple of illegally dominating the market for IOS applications in its App Store.  Since then, CADE has investigated the case and now has filed an administrative procedure against the Big Tech giant. CADE’s analysis concluded that Apple’s practices could effectively block competitors in the markets for app distribution, digital goods and in-app payment systems on iOS. Such practices “are capable of causing irreparable or difficult-to-repair harm not only to app developers, who are currently unable to distribute a wider range of digital products and services, but also to iOS users who are deprived daily, as long as such restrictive policies remain in force, of access to a more diversified range of goods, digital services, features and benefits, which could otherwise be offered in a scenario of robust competition in the affected markets,” CADE said.

— Mercado Livre’s request; CADE’s analysis —

Mercado Livre asked CADE to order Apple to allow ML “to sell, within its iOS application, general digital goods and services, including those made available or consumed in third-party apps.”  
“Apple is already required to adopt, in other jurisdictions, similar adjustments to those requested in this preventive measure due to explicit legal provisions., CADE said, stating that “there is no evidence that these modifications, implemented to comply with legislation, pose irreparable risks to Apple’s business viability or bring negative impacts to app developers or iOS users,” as the company argued. 
CADE said granting the preventive measure “will not create excessive burdens or irreversible obligations for Apple. It will simply extend to the Brazilian market some of the requirements already implemented in various European Union countries under the Digital Markets Act.” 

— CADE’s decision —

CADE ordered Apple to cease, until a final decision on the case, enforcing several clauses from the Apple Developer Program License Agreement and App Store Review Guidelines. These clauses include restrictions preventing developers from: informing users about alternative ways to purchase products outside of in-app purchases; embedding buttons or links in apps that direct users to external purchasing options; distributing their iOS apps through means other than the App Store, such as sideloading or alternative app stores; and contracting Apple’s App Store distribution services without simultaneously using its In-App Purchase system.  
“The approval of this measure, as currently outlined, will give developers and iOS users other options, allowing them the freedom of choice — currently denied — regarding distribution channels and payment processing systems for in-app purchases,” CADE said. 
The authority also mandated that Apple provide mechanisms in Brazil within 20 days to offer additional app distribution and payment processing options and to publish the full decision on its website and formally communicate it in writing to iOS app developers. 

CADE set a daily fine of $250,000 reais (43,021) for violations of the preventive measure.

£45M SEC FINE TO PLC FOR IMPROPERLY VALUING BUSINESS UNIT

UPS, the fabled courier-delivery service whose fortunes have been sinking as Amazon’s have been rising, agreed to pay $45 million to settle US SEC charges that it committed accounting violations in valuing one of its worst performing businesses.  UPS was trying to sell that business, UPS Freight, and eventually did so after misrepresentations to investors regarding the unit’s earnings and other reported items and activities, the agency said.  At the heart of the case is UPS’s obligations to stick to the “fair value” estimate of an asset when selling it in an orderly transaction between market participants, the SEC said. UPS determined in 2019 that UPS Freight, which transported less-than-truckload shipments, was likely to sell for no more than about $650 million. But UPS relied on an outside consultant’s valuation of UPS Freight — at about $2 billion — without giving the consultant necessary information to conduct a fair valuation of the business, the SEC alleged.

— 2020 —Also, the SEC’s order alleges that in 2020 UPS entered into a non-binding term sheet to sell UPS Freight for $800 million with adjustments to be made later that were likely to reduce the final price. Despite its own analysis and its entry into this term sheet, UPS relied again on a consultant’s valuation of UPS Freight to support not impairing the business’ goodwill. UPS also did not inform the consultant of the term sheet.

-2019- the SEC said, the consultant relied on assumptions from UPS that were clearly not ones a prospective buyer would make. 
“Like the prior year, had UPS properly valued Freight and impaired goodwill, its earnings and other reported items would have been materially lower,” according to the SEC (see here). UPS sold the business to TFI International for $800 million in 2020. 
UPS neither admitted nor denied the allegations. A UPS spokesperson said today that the settlement amount “had previously been fully accrued in our financial statements, and the settlement will not have a material effect on our business, financial condition, results of operation, or liquidity. The investigation with respect to UPS has concluded.”


Posted by wpMY0dxsz043 in COCOO CASES, 0 comments

steps.final

COCOO STEPS


WATCHLIST      RESEARCH TOOLS  CL CASES AND TOOLS  SHORTSELLING  ENVIRONMENT  PB PI MALPRACTICE

all gov publications

-ECONOMETRICS [statistics capable of empirically evidencing economic relationships.]

<>
CL CONTROLS + (POLICIES=SOSBIS)
   <>   MERGER CONTROL.  <>  .MERGER PROHIBITION (TOBII V CMA).

<>  THREAT TO COMPLAIN TO CMA, FOR FAILURE TO NOTIFY CMA OF A RELEVANT MERGER SITUATION. ….EG. ‘I FOUND AN SLC’ (SLC TEST)

-FLOWCHART + CLIENTEARTH CASE.

– MARKET POWER (MAP: is inv.prop. to consumers’ ability to switch) <> BUYER POWER (BUP)

-IS THERE A CMA DECISION , ON PI GROUNDS,  [SEE .PI GROUNDS SAMPLES TAB.] INCONSISTENT WITH UK/EU’S INTERNATIONAL OBLIGATIONS, (EG PARIS AGREEMENT; CLIMATE CHANGE ACT) ?… IF SO, TO THE EXTENT THAT ART. 2 OR 8 ARE ENGAGED, I CAN CHALLENGE THE DECISION UNDER HRA98, (CASE: MILLER V PRIMER MINSTER 2019) <> .SUSTAINABILITY POST

-BEST . CMA PROMPTING EGS:

-ADP: LOTS OF PROPER COMPETITIVE BEHAVIOUR, BECOMES IMPROPER(adp) WHEN A CO BECOMES DOMINANT… cocoo TARGETs only DOMINANT COS

-MFC AGREEMENTS: (MOST FAVOURED CUSTOMER/MOST FAVOURED NATION)…cocoo TARGETs EVEN NATIONS!

-ILLEGAL MERGERS (PROPOSED OR COMPLETED OR DE FACTO)

-LEGAL MERGERS (PROPOSED OR COMPLETED OR DE FACTO) WHICH REDUCES BOTH CONSUMER CHOICE AND RIVALRY

-COS WITH SIG BUP, BUT INSIG MAP, WHO FAIL TO PASS COMPENSATORY BENEFITS TO THE CONSUMERS

FOC OR ADVICE BOTH PARTIES, ON COURT DECISIONS eg. CAT (WITH PLFs BINDING AND/OR NON BINDING)…. CONTACT THE WINNING PARTY TO SELL MY DUEDILIGENCE (dd) PROPOSED, REMEDIES ETC (IMPLIED THREAT) AND/OR CONTACT LOSING PARTY, TO SELL THEM MY  dd,  ON HOW TO WIN AN APPEAL

IDENTIFY PROPOSED MAs UNDER CMA INVESTIGATION; AND MAs COMPLETED THAT ARE NOT UNDER INVESTIGATION.  WHERE THEY VOLUNTARILY NOTIFIED?

NSI ACT PUBLICATIONS  EU INFO SOURCES  FOIA . eg CMA EXPERTS

These are publications of CMA final orders, on PI  grounds BASED ON THE NSI ACT : THE PI STEPS. :   17 areas = mandatory notification=nsi act) .  THE REST ARE ON CL grounds (voluntary notifications)

-OTHER SOURCES OF INFO:

-competitionlawexpert.co.uk; probono solicitors; -published legal opinions; -press releases; -speeches; -decisions; -strategic steers; -recommendations; – NAO; -TRADE ASSOCIATIONS (incredibly, the communications between cos, made through trade associations, are legal !): look for trade associations decisions/agreements, as they are possible undertakings (subject to CL) ; -statements of objection (SOs); -Settlement decisions by CMA/CTA/etc : they are less detailed (than court decisions) but can also be very useful to identify possible FOCS and also settlement flaws that Padi can FOC. ; -For PIEEACs:  indetify recent failures to tender RJ decisions;   also in Financial Ombudsman Service complaints (to find what’s going wrong) < > EC/CFI(GC)/ECJ…..CAT/CMA decisions; -Bloomberg; -EC/CFI(GC)/ECJ…..CAT/CMA RJ JUDGMENTS; -Press Releases;  -decisions

GC+ECJ press office + cases   BLOOMBERG PRESS RELEASES   CMA CASES    CMA MEDIA ENQUIRIES   CAT CASES AND LIVESTREAMS

CA CASES AND LIVESTREAMS    SUPREME COURT LIVESTREAMS.    MINISTRY OF JUSTICE PRESS OFFICE   EC CASES

EC PRESS CONTACTS     ARTICLES    HOW TO FIND STORIES 

SOS: read publications of the INs

  (INTERVENTION NOTICES, to investigate and make a decision, on a PI ground ONLY (17 AREAS=mandatory notification=nsi act)

see publications of the co’s  SOIs(statements of interest) or Undertakings (concesions, commitments, compromises) ?

<>  cma review of undertakings

cma has a duty to inform sos , if any firm’s undertakings need to be released, varied, or enforced….cocoo will argue cma’s breach of this duty [re. bae, etc]

TOP     TOP DISCLOSURE TABLE    TOP SOIs  +   TOP RECOMs

*TOP has no power to enforce the SOIs… see the TOP consultation document of 2017

-did cos. fail to comply, after the MA, with the undertakings and SOIs? possible fines, and undoing the merger (at huge loss to company)

– Any undertakings that TOP fail to imposed?

USE COCOO’S TOOLS on existing MAs: LATEST M&A

-are there MAs that failed a mandatory notification?, if so, the MA is VOID….I WILL ARGUE THAT MA SHOULD HAVE BEEN NOTIFIED, OR, IF NOTIFIED, I WILL ARGUE THAT IT CONTAINED FALSE/MISLEADING INFO.

eg. the proposed MA falls under UK (CMA/SOS) jurisdiction?

eg. are companies undervaluing their annual t.o. (to be below the £1m min.threshold for CMA investigation?)… if so, SOS should still issue I.N. (in PI, if is within the 17 areas)

eg. the target company is targetted precisely because is a newy (that has not yet reached the £1m t.o.) so the MA will not be investigated?….. if so, SOS should still issue I.N. (in PI, if is within the 17 areas)

-MAs should have been blocked, or cleared?,

-is the uk government (SOS) encouraging mergers between national cos, to make a National Champion (NC), using national PI grounds: so that it can compete effectively with china etc?:

PADI will PAP this SOS decision, because national champions are usually NMs(near monopolies)…. also, who should be a nc should be decided on economic strategy grounds, and not by lobbyists (the sad reality). even the CMA resist nc.  ncs should not be created on national PI grounds, because it should only be competitive markets that produce ncs. . Also, if every country supports (using taxpayers cash) their national champions, their relative positions will not change, but taxpayers all over the world will be worse off.  CASE: siemens/alstrom railways. EC banned the proposed MA, despite merkel and macron arguing in favour of the MA as they wrongly (type II error) argued that EU needs a nc.

Every gov. policy has 2 risks:

1/type I error: suppressing the birth of a nc, when it should be allowed. this error is very unlikely, because is unlikely that a nation needs a champion.

2/ type II error: supporting a national champion, when is not necessary. this error is more common and serious, becos it creates a national NM.

To answer above questions, cocoo will do these tests:

-TOT (turnover test)=£1m annual t.o. min, to be called-in by CMA for investigation.

-[market share test = SOST (share of supply test: min.25% of supply of goods/services in UK, prior to MA )]

-HMT(hypothetical monopoly test] = SSNIP test : is a test to define [market boundaries = market definition]. it asks: WOULD THE MA ALLOW THEM TO INCREASE PRICE BY 10% SUSTAINABLY?….if so, the MA should be blocked……The SSNIP test allows for loose application: egs:

-the price increase is not over prevailing prices, because they already most likely reflect the NM(near monopoly) power. Thus, it should be over the prices that would prevail if the market was competitive.

-in intermediate goods markets (where there are retail and wholesale transactions) : what’s the extent of passthrough? (the extent which retailers pass the 10% pricerise to consumers.),… and, whats the extent of consumer reaction to the passthrough?

-the cellophane phallacy: when monopoly prices prevail, there will appear to be many product substitutes (to the NM products)… BUT, they could be in separate markets. …usa case Dupont: dupont argued that cellophane was not a separate market because there was a high elasticity of demand between cellophane and alluminium foil. But court held that they were separate markets thus cellophane was not a NM, because it only had a small share of the ‘wrappings market’.

-is not always 10%…it will depend on the market, inflation, past prices, etc.  less that 10% implies that demand is more elastic. and viceversa.

-the priceincrease needs to be ‘non-transitory’. most accept that should be min.1 year, but this depends on the market, inflation, past prices, etc.

-what factors det. competitiveness?:

a.intramarket rivalry:  can competitors can act collectively, as a single NM, to constrain prices of the merged company.? if so, the merged co. has low market power.

b.extent of buyer/supplier power:  do buyers have good alternatives to the 10% priceincrease? ; can they negotiate down the price?;

c. rivals dont need to be in a market to affect competition.  the mere threat of entry can affect competition.

-NMs are more likely to introduce innovations (R&D) (to protect their NM). notice that innovation is in a different market to the products.


 CHRONO INVESTIGATION STEPS


1-cocoo will specialise in bringing/pap nonclass wpi focs: why?

cocoo does not need to find victims, as litigates on own standi, on wpi of citizens/consumers….since, these are different than the rjparties, the foc is not rj….but cocoo needs to find members (harmed ), unless is a EEAC cocoo does not need to prove the (infringement) rjdecision [becos is a foc]

2-  smap ??. If no smap, end.  IF SMAP, ANTICOMPS?

Persistent high profits may signal anticompetition… but before reaching this conclusion we must ask:  why are profits high?;  will they keep high in the future?

IDENTIFY PIFOC  (PUBLIC INTEREST FOC) TYPE

A/ NON-EEAC PIFOC

B/ EEAC PIFOC <> the 17 areas of the NSI Act

public body fails to tender a public contract…[is eeac becos no person has more right to sue than any other, since no person ever tendered.]..environment public body (or private firms providing public services) engaging in anticomps CMA making flawed decisions
regulators making flawed regulation

WHO TO FOC V …? = IDENTIFY FOC DEFENDANT

MARKET DEFINITION. MARKET SHARE    ANCHOR DEFENDANTS

V. CO/DIRS, ON PI GROUNDS, FOR ALLOWING THE GROWTH OF THE CO’S ‘COMMON OWNERSHIP’ TO HARM COMPETITION…….   OR V FINANCIAL COS, ON PI GROUNDS, FOR BEING TO BIG TO BE ALLOWED TO FAIL

PB <> CL POLICIES, REGULATION & SUPPLEMENTATION   <>  CMA AND CL POLICIES

RESEARCH PBs AND SEEK REMEDIES:

Threaten cos to complain to cma/sos ? or challenge via . JR SEE JR TAB]. +  IN MERGER CONTROL TAB  + JR IN CL TAB

-Read government strategies and plans:   are they inadequate?. High Court litigation is available, for instance to request a redraft.

-Public recruitment with no advertising or fair process?

-Non-tendered contracts?. No contract award notices?. Connections? Conflicts of interest? . Research the awarded company: do they have enough resources and experience? do their websites engage in data analysis and targeting of competitors or political adversaries? (contact AWO data breach agency). Who’s behind these breaches of data protection? why did they do it?  Who is funding them?

-Research leaked documents

A local authority may be convicted of a civil or a criminal offence…Also, for a
breach of statutory duty claim v a local authority, a claimant has to establish:

Parliament imposed a statutory duty for a limited class of the public
 Breach of the duty should give rise to a private law action for damages

A common law action for damages is difficult for breach of statutory duty although a civil remedy may still be possible. Cases: X (Minors) v Bedfordshire County Council……Phelps v Hillingdon London Borough Council

-cma/sos decision (or failure to decide)?:

ex: should SOS have (or not) issued a (or such a) PII?  <> SEE PDF PII NOTICE AND CMA REPORT

V GOV OR REGULATORS   <> REGULATORS FAILURESWHY REG.COS EXHIBIT WEAK INTEREST COVER RATIOS:

exs:   See full details in PDFs :

-has the regulator estimated the cost of capital properly?…are the reg.cos complying?

-has the regulator calculated price controls properly?… are the reg.cos complying?

–has the regulator calculated co. incentives (for co. to improve its efficiencies) properly?… are the reg.cos complying?

-Threaten a reg.co to complaint to its regulator / or threaten a non.reg.company with a duty to be regulated:

a. companies in the airports and telecom sectors: i can threaten to ask regulator to make a market power determination, if i think the co should be regulated (or should not).

b. companies in all other sectors:  i can allege that the co needs to be (or not be) regulated, which would have to be via: appointment; designation; or licence (eg. solicitors LPC)

PADI PRODUCES A POSITION PAPER/ DUE DILIGENGE REPORT/PROPOSED REMEDIES ETC  AND THEN TRIES TO BE RESTITUTED BY THE COMPANIES

NDA   REMEDIES TAB

FOC GROUNDS AND WHERE TO FOC

-BEST Grounds:  contempt, public interest.; assisting crime/fraud; co-conspiracy; complicity…..

-EC: ‘THE SUSTAINABILITY(PI) QUALITIES OF A PRODUCT ARE INDEED A COMPETITION PARAMETER (CL)’  < > OECD: AN UA IS BOTH PI + CL, IF PRODUCES DIRECT ECONOMIC BENEFITS (WHETHER ON JUST THE COMPANY, OR ON THE WORLD), (EG. ENVIRONMENTAL BENEFITS),

-BANANAS, CHOCS, COFFEE : THE INTERMEDIARIES/WHOLESALERS/RETAILERS , PAY TOO LOW UNFAIR PRICES TO FARMERS (SOUTHAMERICA…)  + ENCOURAGE EXCESSIVE USE OF SCARCE RESOURCES + DISCOURAGES SUSTAINABLE LAND PRACTICES.  (102.A TFEU)

– HOW SH PRIMACY; COMMON OWNERSHIP; CONCENTRATION OF ASSET MANAGEMENT, AFFECT CL/PI ?  <> FINANCIALISATION POST

-DID THE COMPANY IDENTIFY (OR AT LEAST TRIED TO) OPPORTUNITIES TO WORK TOGETHER FOR SUSTAINABILITY ?…. DID THEY ENGAGE IN SUSTAINABILITY?…. THEY CAN LAWFULLY ENGAGE IN ANTICOMPETITION, AND EVEN RAISE PRICES, AS LONG AS IT IS WITHIN A SUSTAINABILITY (STANDARISATION – NOT REQUIRED, BUT RECOMMENDED) AGREEMENT….

< >COCOO WILL ASK FOR DISCOVERY OF THE SUSTAINABILITY/STANDARISATION AGREEMENT….TO SEE IF BREACHED

-CAP REP BREACH?

-FAILURE TO FOCUS ON THE CONSTITUTIONAL PROHIBITIONS OF THE EU TREATIES?….PROPORTIONALITY PPLE. APPLIED?

-A CONFLICT BETWEEN PI(=SUSTAINABILITY) GROUNDS/POLICIES, CL(=ECONOMIC) GROUNDS/POLICIES. ?….IF THE BODY (PUBLIC OR PRIVATE) IS ENGAGED IN ECONOMIC ACTIVITIES, IS ACTING UNDER AN UA (THUS, SUBJECT TO CL)…. NOW, COCOO WILL ASK CMA TO DISCLOSE THE SFOs (SHORT FORM OPINIONS) ISSUED.

FOC GROUNDS:  PI/GREY/CL
EU CONSTITUTION AND COURT JURISDICTION (WHERE TO FOC)     PI GROUND (SUSTAINABILITY)  MERGER CONTROL

ADP   CARTELS

PADI PAPs  LPC/CIP  for possible:

a.private action (v company) , to void the MA, for failing to notify the MA, or failing the undertakings/SOIs;

b. for possible JR (judicial review) v decision (or omission to decide) by:

-SOS (only has jurisdiction on PI ground=17 areas) to decide to issue (or not) an I.N.(intervention notice), or decision (type II error) to support a national champion, when is not necessary. this error is more common and serious, becos it creates a national NM.

-TOP/CMA failure to implement undertakings/SOI etc…. and to follow them up

-CMA (has jurisdiction on both PI or competition grounds…thus, on any areas (of the economy) …. Most MAs are outside the 17 areas, thus notification is voluntary, and most are only reported after taking place!…. this is risky, because CMA could investigate and order the MA to be undone (the merged company must sell very quick a big chunk, usually at a huge loss.

eg: META/Giphy case)  


[mop = SMAP] + ANTICOMPS = CL VIOLATION >> If there is no smap….there is no need to look at anticompetitive effects…THUS:

  • STEP 1 <> cocoo’s first step is always to identify the possible existence of smap.
  • STEP 2:  WHEN A FIRM IS FOUND TO HAVE SMAP , CMA.EC MUST NOW find that the firm’s conduct has anti-competitive effects.

STEP 1

single firm conduct provisions should be applied only to firms that have “substantial market power SMAP”: when competitive constraints imposed by other firms are relatively ineffective on the dominant firm. In this situation, the dominant firm’s decision about its own output and price can influence market outcomes.

is map durable? [can be maintained for a considerable period of time]

Competition authorities and courts rely primarily on indirect evidence to determine whether a firm has smap, such as market shares, barriers to entry and expansion, buyer power and the nature of competition in the market. there is no single factor that will
provide conclusive answers.

Entry barriers and barriers to expansion are the most important factors in determining whether a company’s ability to exercise smap, is effectively constrained. If other firms can enter or rivals can expand, a firm will not be able to
maintain smap. Barriers to entry and expansion are thus a necessary, but not sufficient for conclusive evidence of smap, because markets can be competitive even if entry barriers are high.

The assessment of entry barriers requires a thorough analysis of the likelihood, extent and timeliness of entry or expansion that can constrain the exercise of market power. A decisionmaker might conclude ,incorrectly, that entry barriers are low, for example, when
entry appears possible but in fact would not constrain map. Conversely, there is a risk that once high market shares have been found, the existence of entry barriers is assumed without sufficient factual inquiry.

There are indirect smap evidence-types, to draw conclusions from : structural market; buyer power;

Market share data continue to be the “high priest” in assessing whether a firm has smap. market share data depend on the ability to define a relevant market ….but… Where market boundaries are difficult to draw, market share (concentration) data are close
to arbitrary.

Even with accurate market definition, high market shares are not necessarily proof of smap. Any presumed correlation between high shares and market power will depend on:

a.how competitors or customers can react when a firm restricts output,

b. the reasons why the firm maintained high market shares, and

c. whether there are any other conditions that limit the firm’s ability profitably to raise price.

These factors are indeed more relevant than market shares in establishing smap

Market shares can fail to correctly predict whether a firm has smap

Direct evidence of smap, such as a firm’s profitability, is not frequently used
in single firm conduct cases. Methods for directly measuring market power are very dataintensive; and even if the necessary data are available, they are typically subject to different interpretations and therefore will not conclusively establish smap.

One econometric method to directly measure a firm’s market power is to estimate a firm’s
demand elasticity. Elasticity of demand is the percentage change in quantity demanded for a
particular product in response to a one percent change in price. Estimating a firm’s demand
elasticity with respect to a product, measures how customers will react to a price
change and to what extent the firm’s sales are sensitive to changes in rivals’ sales. A firm will
face inelastic demand if competitors cannot react “effectively” by increasing their output in response to a firm’s increase in price or decrease in output. Thus, low firm’s price elasticity suggests greater market power. … but this method requires to gather large amounts of data

if high profits have been persistent and are consistent with other evidence, they
could be a smap indicator.

Conduct of a firm can also be considered as evidence in the analysis of substantial market power. However, conduct in itself cannot be smap evidence

the fact that a firm conduct engages, eg in price discrimination, cannot in itself demonstrate that the firm has smap

Competition authorities and courts should also be willing to consider conduct of a firm as
relevant evidence that a firm lacks market power. For example, bidding wars for customers where smaller competitors win new customers or the alleged monopolist/dominant firm is forced to lower its prices in response to market entry are inconsistent with smap


STEP 2

WHEN A FIRM IS FOUND TO HAVE SMAP , CMA.EC MUST NOW find
that the firm’s conduct has anti-competitive effects.

In economic theory, a firm is said to exercise market power when it prices above its short-run
marginal costs. Unlike the demand curve faced by a firm in a perfectly competitive market, the demand curve faced by a firm with market power would not be not flat, but negatively sloped. The slope of the demand curve, is the firm’s market power.

In practice, almost all firms have some degree of market power and are able to raise
price above short-run marginal cost. Moreover, a firm may have market power for a variety of benign reasons. For example, in industries characterized by scale economies, even efficient companies would be unprofitable if they did not exercise market power and price above short-run marginal cost. Some degree of market power therefore is the norm and is compatible with competitive markets

map is harmful only if it can become smap [durable map] = a firm that could, durably, raise/maintain price above competitive level and exclude competitors (or other barriers)

monopoly power (= smap) = the ability of a profit maximizing firm, to price above long-run marginal cost, rather than short run marginal cost.


Dominance and Monopoly Power: Tests:

EC.clp

Article 82 of the EC Treaty refers to an “abuse by one or more undertakings of a dominant position within the Common market or a substantial part of it…”

ecj: “dominance” is the ability of a firm to act [independently = smap] from competitors, customers and ultimately of its consumers

ec: microsoft case: held: Microsoft acted [independently = smap] from its competitors, emphasizing that despite the emergence of competing OS programs, Microsoft’s financial performance was not affected, Microsoft did not alter its pricing policy and business model, and remained successful. The Commission also found that Microsoft was
independent of customers, because MS Windows was a must carry product for PC
manufacturers. It also noted that Microsoft was independent from end-consumers, emphasizing several statements that highlighted the high switching costs faced by customers which prevented them from using competing operating software.

Super-dominance: Along the same lines, in Microsoft the Commission referred to Microsoft as a firm with an “overwhelmingly dominant position.”= A NEAR MONOPOLY = carries a proportionally higher responsibililty on the firm, to avoid anticomps.

Entry barriers are a smap requirement. thus, entrybarriers are the most important factor to identify smap, because, without the ability to exclude entrants, a firm will not be able to maintain smap.


UK

definition of “dominance”. Article 82 of the EC Treaty (Article 82) prohibits ‘any abuse of a dominant position’ as incompatible with the common market in so far as it may affect tradebetween Member States.  However Article 82, and the Chapter II prohibition in the UK, does not define ‘dominance’. Similarly, market power is not defined in the uk Enterprise Act 2002….While the cma agrees that smap is a necessary condition for dominance, we are less clear that the ability to “substantially increase prices above the competitive level for a significant period of time” provides an ideal definition of smap. why?:

1- Firstly, there may be many oligopolistic markets in which prices lie above the competitive level, but in which no individual firm would be found dominant

2- Secondly, this definition does not capture any element of “ability to prevent effective competition”. This would seem to be an important element in the definition of dominance, especially where the alleged abuse is exclusionary.

Weight to place on market shares in assessing smap:

it is easy for too much energy to be spent on market definition and calculation
of market shares, and too little time and effort on other more important factors such as barriers to entry and expansion and market dynamics. Whether or not an undertaking has smap, depend upon the constraints upon it from its existing competitors, potential competitors and countervailing buyer power.

market shares are only used as a filter at a preliminary stage of a case – that is, they give no presumption of dominance. A low market share generally indicates a low likelihood of consumer harm.


Other relevant factors in assessing dominance include the following

• Low entry barriers – A firm (or group of firms) with a persistently high market share may not
necessarily have market power where there is a strong threat of potential competition. If entry
into the market is easy, the incumbent firm might be constrained to act competitively so as to
avoid attracting entry over time by potential competitors.

• Buyer power – If buyers have a strong negotiating position this will constrain the potential
market power of a seller. For example, a rival representing 5% of sales may be an effective
constraint if customers are able to sponsor its rapid expansion and have exercised this constraint in the past. Size alone is not sufficient for buyer power. Buyer power requires the buyer to have choice either by sponsoring entry or expansion or by switching between suppliers easily and readily.

• Bidding markets – Sometimes buyers choose their suppliers through procurement auctions ortenders. In these circumstances, even if there are only a few suppliers, competition might be
intense. This is more likely to be the case where suppliers are not subject to capacity constraints (so that all suppliers are likely to place competitive bids), and where suppliers are not differentiated (so that for any particular bid, all suppliers are equally placed to win the contract). In these types of markets, a firm might have a high market share at a single point in time and for the period of the contract, which may be several years. However, if competition at the bidding stage is effective, this currently high market share would not necessarily reflect market power.

• Successful innovation – In a market where firms compete to improve the quality of their
products, a persistently high market share might indicate persistently successful innovation and so would not necessarily mean that competition is not effective. An effective constraint on market power can come entirely from the threat of rival companies superseding the incumbent’s product. A persistently high share could also arise if one firm is significantly more efficient than its competitors.

• Product differentiation – Sometimes the relevant market will contain products that are
differentiated. In this case firms with relatively low market shares might have a degree of market power because other products in the market are not very close substitutes.

• Responsiveness of customers – Where customers are very price sensitive, substantial market
shares may not reflect a firm’s market power. In such cases a price increase may lead to
consumers switching to a close substitute, or choosing not to buy the product. In contrast, where switching costs are high, a firm may have market power over its ‘captive’ customer base even if its share of the market is relatively low.

• Price responsiveness of competitors – Sometimes a firm’s competitors will not be in a position to increase output in response to higher prices in the market. For example, suppose a firm operates in a market where all firms have limited capacity (e.g. are at, or close to, full capacity and so are unable to increase output substantially). In this case, the firm would be in a stronger position to increase prices above competitive levels than an otherwise identical firm with a similar market share operating in a market where its competitors are not close to full capacity.

• Profitability – An analysis of profitability in a market may provide an indication of limitations in the competitive process.10 A methodology that has been employed in the UK Market
investigations regime is to use Return on Capital Employed (ROCE) as the principal profitability measure. The ROCE is compared to the estimated cost of capital for a typical firm in the market being investigated. There is no threshold, over which profits might be said to be “substantially in excess of the cost of capital”, but the greater the excess profitability, the stronger may be the inference of limitations on the competitive process….Another reason for caution over market shares is the well recognised difficulty of market definition where prices are not at competitive levels. This is likely to be the position in markets where an undertaking has substantial market power. If prices are significantly above competitive levels, the Hypothetical Monopolist or SSNIP test will indicate too wide a market. If prices are below competitive levels the test may also provide an inappropriate market delineation (which may be too wide or too narrow). In addition, there is a tendency to conclude, erroneously, that all products within the defined relevant market are perfect substitutes while those outside offer zero substitutability or constraint on products in the market – the so-called zero-one fallacy. This may be particularly problematic with differentiated products

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