AG's unpublished Occupied Territories Bill advice in full

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Late last October attorney general Rossa Fanning wrote to Simon Harris, Micheál Martin and Roderic O'Gorman. In his letter Fanning gave the government ministers advice on the Occupied Territories Bill – legislation that has been blocked by successive governments for the last seven years.

Government didn't publish the advice.

In the advice Fanning said that replacing the bill rather than amending – as Micheál Martin says government has to do – would be a "political choice" and not a legally necessary one. He also commissioned legal counsel who approved a separate divestment bill, which government has also blocked, that would ban state investments related to illegal Israeli settlements.

Here's attorney general Rossa Fanning's advice in full.

RE: Implications of the ICJ Advisory Opinion for Government’s position on Control of Economic Activity (Occupied Territories) Bill 2018 (No.6 of 2018)

Dear Taoiseach,

I refer to your letter of 30 August 2024 in which you asked me to advise on any implications the Advisory Opinion on the Legal Consequences arising from the Policies and Practices of Israel in the Occupied Palestinian Territory, including East Jerusalem, delivered on 19 July 2024 (the "ICJ Opinion") by the International Court of Justice (the "ICJ"), may have for the Government's position on the Control of Economic Activity (Occupied Territories) Bill 2018 (the "Bill").

I prioritised the preparation of this advice in September, but deferred issuing this correspondence until I was in a position to meet with you, An Tánaiste and Minister O'Gorman to discuss the matter. As you know, I had that opportunity on Monday, 14 October and am now setting out the basis for the views that I expressed at that meeting.

I consider the ICJ Opinion below before considering what implications it may have for the Government's position on the Bill.

Background

Ireland and the EU recognise Israel and maintain diplomatic relations with It. However, Ireland and the EU nevertheless consider that Israel has, since June 1967, and as a matter of international law, occupied territory belonging to other states illegally. In particular, since 1967. Israel has occupied the following (predominantly) Palestinian territories, being the West Bank of the Jordan River, the Gaza Strip and East Jerusalem (collectively, the "Occupied Palestinian Territories” or the "OPT") in addition to the Golan Heights, which belong to the Syrian Arab Republic.

As Ireland and the EU recognise only the borders of Israel as they stood before 1967, the scope of the EU-Israel Association Agreement (a trade agreement concluded between the EU and Israel in 1995) only extends to Israel’s pre-1967 borders and therefore excludes the OPT. In 1997, a separate trade agreement was concluded between the EU and the Palestinian Liberation Organisation (the "PLO").

The EU has repeatedly made clear that it does not recognise Israeli settlements in the OPT and that Israeli settlements in the OPT are illegal under international law. For example:

• In 2009, the Council of the European Union (the "Council") stated:

"The European Union will not recognise any changes to the pre-1967 borders including with regard to Jerusalem, other than those agreed by the parties.

…

The Council reiterates that settlements, the separation barrier where built on occupied land, demolition of homes and evictions are illegal under international law, constitute an obstacle to peace and threaten to make a two-state solution impossible. The Council urges the government of Israel to immediately end all settlement activities, in East Jerusalem and the rest of the West Bank and including natural growth, and to dismantle all outposts erected since March 2001."

• In 2013, the EU adopted guidelines on the participation of Israeli entities in programmes financed by the EU, which provide as follows:

"The EU does not recognise Israel's sovereignty over any of the territories referred to in point 2 and does not consider them to be part of Israel's territory, irrespective of their legal status under domestic Israeli law. The EU has made it clear that it will not recognise any changes to pre-1967 borders, other than those agreed by the parties to the Middle East Peace Process (MEPP). The EU's Foreign Affairs Council has underlined the importance of limiting the application of agreements with Israel to the territory of Israel as recognised by the EU."

• In 2014, the Council stated that "[t]he EU will recognize changes to the pro-1967 borders, including with regard to Jerusalem, only when agreed by the parties” and again called upon Israel to halt the expansion of settlements.

• In 2015, the Council reiterated that the "settlements are illegal under international law." It added:

"The EU and its Member States reaffirm their commitment to ensure continued, full and effective implementation of existing EU legislation and bilateral arrangements applicable to settlement products. The EU expresses its commitment to ensure that -in line with international law - all agreements between the State of Israel and the EU must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967."

• In 2021, the EU stated:

“Settlements are illegal under international law and constitute major obstacle to the achievement of the two-State solution and a just, lasting and comprehensive peace between the parties. The European Union has consistently made clear that it Is strongly opposed to the expansion of settlements and will not recognise any changes to the pre-1967 borders, including with regard to Jerusalem, other than those agreed by the parties."

• In March 2023, the EU High Representative for Foreign Affairs and Security Policy Issued a statement "on behalf of the European Union" that the "settlements are illegal under international law.”

These views expressed by the EU institutions reflect the long-standing position of the United Nations that the Israeli settlements in the OPT since 1967 are a breach of international law. For example, UN Security Council Resolution 2334(2016) of 23 December 2016 called on all UN members to distinguish between the territory of the State of Israel and the territories occupied since 1967.

Control of Economic Activity (Occupied Territories) Bill 2018

The Bil is a Private Member's Bill introduced by Senator Frances Black in 2018 "to give effect to the State's obligations arising under the Fourth Geneva Convention relative to the Protection of Civilian Persons in Time of War and under customary international humanitarian law, and for that purpose to make it an offence for a person to import or sell goods or services originating in an occupied territory or to extract resources from an occupied territory in certain circumstances; and to provide for related matters.”

Section 3(1) of the Bill defines "relevant occupied territory as a territory” which is occupied within the meaning of the Fourth Geneva Convention, and which has been:

"(a) confirmed as such in a decision or advisory opinion of the International Court of Justice,

(b) confirmed as such in a decision of the International Criminal Court,

(c) confirmed as such in a decision of an international tribunal, or

(d) designated as such for the purposes of this Act in a regulation made by the Minister pursuant to section 4.”

The OPT falls within the above definition but, as is clear from the above definition, the Bill is much wider and will apply to any territory falling to be defined in the above categories. While the alternative conditions in section 3(1)(a) and (b) are reasonably clear in referring to specific institutions, section 3(1)Y(c) is broad and somewhat vague and section 3(1)(d) is similarly vague and delegates the power to designate a "relevant occupied territory" to the Minister without specifying any principles and policies to guide the Minister's discretion.

Section 5 of the Bill provides that it applies to Irish citizens ordinarily resident in the State, companies incorporated under the Companies Act 2014 and unincorporated bodies whose centre of control is exercised in Ireland. Section 5 also provides for the extra-territorial application of the Bill by providing that such persons or entities will be committing an offence if they commit an act or omission under the Bill outside the State.

Sections 6-9 of the Bill provide that it shall be an offence for one of the persons outlined in section 5 to:

• import, attempt to import or assist in the importation of "settlement goods";

• sell, attempt to sell or assist in the selling of settlement goods;

• attempt to provide or assist in the provision of a settlement service; and

• engage or attempt to engage in the extraction of resources from a relevant occupied territory or its associated territorial waters.

Pursuant to section 10 of the Bill, a person who is guilty of an offence under sections 6-9 is liable to a class A fine or a term of imprisonment not exceeding 12 months for a summary conviction and a fine not exceeding €250,000 or a term of imprisonment not exceeding 5 years for a conviction on indictment.

The Bill was initiated in Seanad Éireann on 24 January 2018 and was passed by the Seanad on 5 December 2018. A Government Decision was made to oppose the Bill in the Seanad on 29 January 2018. The Bill is currently at Committee Stage before Dáil Éireann, since it was restored to the order paper on 9 December 2020.

The advice of my Office was initially sought in June 2018. Having examined the Bill and a number of opinions submitted by the proponents of the Bill, by letter dated 9 July 2018 (the "2018 AG Advice"), the then Attorney General, Séamus Woulfe SC advised the then Tánaiste and Minister for Foreign Affairs, Simon Coveney TD, of a number of legal difficulties with the Bill. These difficulties were summarised as follows:

"52. This draft Bill is contrary to Article 207 TFEU since:

The EU has exclusive competence in the area of the common commercial policy;
The "public policy" objection could not be applied as it must be commercial policy and only in exceptional circumstances,

53. Section 4(4) of the Bill will give rise to constitutional difficulties as it empowers the Minister to extend the scope of the Bill without recourse to the Oireachtas contrary to Article 15.2 of the Constitution.

54. Having regard to section 5, it is not appropriate to apply extraterritoriality to this legislation because:

- It is likely to interfere with the general principles of international law to include the comity of nations as it is unlikely that there would be dual criminality in any other jurisdiction;

- It would be impracticable to investigate, prosecute or extradite a person for committing this offence.

- The criminal offences in the Bill do not have legal certainty, are not capable of enforcement and therefore would be at risk of constitutional challenge.”

On foot of a request for further advice on the Bill my predecessor, Paul Gallagher SC, wrote to the then Minister for Foreign Affairs, Simon Coveney TD on 22 January 2021 (the "2021 AG Advice"). The letter reiterated the advice of the previous Attorney and advised that the Bill is contrary to EU law and that certain provisions are unconstitutional. On the issue of EU law, the letter explained inter alia:

"Under Article 3(1) TFEU the entire field of the Common Commercial Policy is now an exclusive competence of the Union. Title ll Part 5 of the TFEU makes trade with third countries part of the Common Commercial Policy. Accordingly it is not permissible for a Member State to adopt a position on trade if the third country is independent of the EU.

In fact the EU has entered into a trade agreement Association Agreement. It has separately entered into the EC-PLO Association Agreement which applies to the territories of the West Bank and the Gaza Strip.

The EU-Israel Association Agreement provides the legal framework for EU/Israel relations. This Agreement includes provisions on regular political dialogue, on freedom establishment and liberalisation of the services, the free movement of capital and competition rules, the strengthening of economic co-operation and co-operation on social matters.

The agreement states that respect for human rights and democratic principles guides the internal and international policy of both Israel and the EU and constitutes an essential and positive element of the agreement. At Israel's request there is a Joint Declaration on the importance of both parties attached to the struggle against xenophobia, anti-Semitism and racism.

Subsequently UN 2009 a further EU/Israel Agreement on agriculture was concluded and it provides for reciprocal liberalisation measures on agricultural products, processed agricultural products and fish and fishery products. On 8 June 2014 Israel and the European Union signed the Agreement associating Israel to the Horizon 2020- Framework Programme for Research and Innovation (2014-2020). The Agreement provides Israeli researchers, universities and companies with full access to the Horizon 200 Programme.

It will be noted therefore that the EU has entered into a number of international agreements with Israel and has extensive trading relations with that State.

In circumstances where international trade with Israel is part of the Common Commercial Policy, Article 3 TFEU excludes any unilateral action by Ireland with regard to any matter the subject of international trade. It follows that Ireland has no competence in this area and the provisions of the Bill which purport to provide Ireland with competence are contrary to EU law."

The 2021 AG Advice also disagreed with the views of the proponents of the Bill that either the public policy exception contained in Article 24(2)(a) of the 2015 Regulation on common rules for imports, or the public policy exception to the free movement of goods under Article 36 of the Treaty on the Functioning of the European Union (the "TFEU"), could be relied upon to provide a legal base for a prohibition of imports from and exports to occupied territories (as defined in the Bill) and with particular reference to the OPT.

The 2021 AG Advice explains that reliance on the public policy exception in Article 24(2)(a) of the 2015 Regulation was unavailing for the following reasons:

The public policy exception must as a matter of EU law be very narrowly construed. In my view it does not extend to permitting any Member State to ban trade in goods and services with Israel's illegal settlements in the West Bank in circumstances where the EU, despite the existence of such settlements, has entered into extensive trade agreements with Israel. In that context the proposed prohibition would run directly counter to the Trade Policy adopted by the EU with regard to Israel and would undermine that policy. Accordingly the public policy exception would not be construed by the Court of Justice of the European Union ("the CJEU") as permitting the proposed prohibition.
The public policy exception envisaged in Article 24 relates to an issue particular to a Member State. The issues which arise with regard to trading with Israel relate to the Israeli position on legal settlements. These issues are not specific to Ireland but apply in the same manner to all Member States.
Article 24(3)(TFEU) requires Member States to support the Union's "external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity" and imposes on Member States an obligation to "comply with the Unions action in this area". The Member States are also obliged to work together "to enhance and develop their mutual political solidarity" and are obliged to "refrain from any action which is contrary to the interests of the Union or likely to impair its effectiveness as a cohesive force in international relations.". Unilateral action by Ireland in the context of the EU's relations with Israel would breach this obligation and could not be permitted by any public policy exception.
The CJEU has had occasion to review relations with Israel under the EC-Israel Agreement in two cases. In Brita (Case C-386/08) the CJEU concluded that goods "which prove to originate in the occupied territories, more specifically the West Bank and the Gaza Strip, are not entitled to preferential treatment" under the agreement. The CJEU did not suggest that the agreement is contrary to international law. In Organisation Juivre Européenne (Case C-363/18) the CJEU ruled that "foodstuffs originating in a territory occupied by the State of Israel must bear not only the indication of that territory but also, where those foodstuffs come from a locality or group of localities constituting an Israeli settlement within that territory, the indication of that provenance." Again there was no suggestion that trading with Israel with respect to goods produced in the occupied territories was contrary to international law.
The EU, Israel and Ireland are all members of the WTO and GATT. Unilateral action by Ireland of the nature contemplated would be a breach of Ireland's obligations under the WTO and would be inconsistent with the EU's obligations thereunder.

The 2021 AG Advice also advises that the Bill is unconstitutional as it authorises the Minister to make regulations prescribing a territory as being a "relevant occupied territory" within the meaning of section 3. It was advised that this provision clearly breaches Article 15.2.1 and Article 29.4 of the Constitution.

The ICJ Opinion

On 30 December 2022, the General Assembly of the United Nations requested the ICJ to:

"render an advisory opinion on the following questions, considering the rules and principles of international law, including the Charter of the United Nations, international humanitarian law, international human rights law, relevant resolutions of the Security Council, the General Assembly and the Human Rights Council, and the advisory opinion of the Court of 9 July 2004:

(a) What are the legal consequences arising from the ongoing violation by Israel of the right of the Palestinian people to self-determination, from its prolonged occupation, settlement and annexation of the Palestinian territory occupied since 1967, including measures aimed at altering the demographic composition, character and status of the Holy City of Jerusalem, and from its adoption of related discriminatory legislation and measures?

(b) How do the policies and practices of Israel referred to in paragraph 18 (a) above affect the legal status of the occupation, and what are the legal consequences that arise for all States and the United Nations from this status?"

The Government decided to intervene and made submissions to the ICJ. In its written statement to the ICJ, dated 25 July 2023, the Government made submissions on the obligations of all states not to render aid or assistance in maintaining the situation created by Israel's illegal presence in the OPT.

The Government's statement referred to the ICJ advisory opinion on the Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory (the "Wall Opinion") which found as follows:

"all states are under an obligation not to recognize the illegal situation resulting from the construction of the wall in the Occupied Palestinian Territory, including in and around East Jerusalem. They are also under an obligation not to render aid or assistance in maintaining the situation created by such construction.”

The Government also relied on Article 41(2) of the International Law Commission's Draft Articles on State Responsibility to argue that states were obliged not to render aid or assistance in maintaining the situation created by Israel's breach of its obligation to respect the right of the Palestinian people to self-determination. In this regard, paragraph 56 of the Government's written statement argued:

"these obligations require all states, as well as international organisations competent in the field of external trade (which for Ireland is the European Union), to review their trading relationships with the settlements in the Occupied Palestinian Territory and to take steps to prevent trade that assists in the maintenance of the situation created by the settlement activity, or that implicitly recognises or serves to entrench Israel's settlement or annexation of that territory".

As you are aware, I appeared and made an oral submission to similar effect on behalf of the Government before the ICJ in The Hague in February 2024.

The ICJ Opinion delivered on 19 July 2024 found that Israel's policies and practices referred to in question (a) above are in breach of international law and that the continued presence of Israel in the OPT is illegal. The ICJ Opinion held that:

"all States are under an obligation not to recognize as legal the situation arising from the unlawful presence of Israel in the Occupied Palestinian Territory. They are also under an obligation not to render aid or assistance in maintaining the situation created by Israel’s illegal presence in the Occupied Palestinian Territory".

The ICJ considered that the obligations violated by Israel included certain obligations erga omnes including the obligation to respect the right of the Palestinian people to self- determination and the obligation arising from the prohibition of the use of force to acquire territory as well as certain of its obligations under international humanitarian law and international human rights law.

The ICJ advised that States are obliged to distinguish in their dealings with Israel between the territory of the State of Israel and the OPT. That obligation includes inter alia:

"the obligation to abstain from treaty relations with Israel in all cases in which it purports to act on behalf of the Occupied Palestinian Territory or a part thereof on matters concerning the Occupied Palestinian Territory or a part of its territory; to abstain from entering into economic or trade dealings with Israel concerning the Occupied Palestinian Territory or parts thereof which may entrench its unlawful presence in the territory; to abstain, in the establishment and maintenance of diplomatic missions in Israel, from any recognition of it illegal presence in the Occupied Palestinian Territory; and to take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the Occupied Palestinian Territory.”

In addition, the ICJ found that all the State parties to the Fourth Geneva Convention have the obligation, while respecting the Charter of the United Nations and international law, to ensure compliance by Israel with international humanitarian law as embodied in that Convention.

The ICJ Opinion is not binding. The requesting organ, agency or organisation remains free to give effect to the ICJ Opinion as it sees fit, or not to do so at all. However, while not binding, such an opinion is generally considered to be an authoritative statement on international law given the status of the ICJ as the principal judicial organ of the United Nations. This is reflected in the fact that certain instruments or regulations provide that an advisory opinion from the ICJ does have binding force.

Furthermore, the Court of Justice of the European Union (the "CJEU") has on occasion treated ICJ advisory opinions as authoritative statements of international law. This can be seen in Organisation juive européenne and Vignoble Psagot v Ministre de l'Économie et des Finances, which was a case concerning the interpretation of EU food labelling rules and the question of how to label food produced in Israeli settlements in the OPT. In that case, the CJEU relied on the ICJ's Wall Opinion as a definitive statement that Israeli settlements in the OPT are unlawful under public international law and, in particular, that they violate international humanitarian law, as codified in the 1949 Geneva Convention relative to the Protection of Civilian Persons in Time of War. The CJEU held as follows:

“it should be noted that the settlements established in some of the territories occupied by the State of Israel are characterised by the fact that they give concrete expression to a policy of population transfer conducted by that State outside its territory, in violation of the rules of general international humanitarian law, as codified in the sixth paragraph of Article 49 of the Convention relative to the Protection of Civilian Persons in Time of War, signed in Geneva on 12 August 1949 (United Nations Treaty Series, vol. 75, No 973, p. 287), as noted by the International Court of Justice, with respect to the Occupied Palestinian Territory, in its Advisory Opinion of 9 July 2004, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory (ICJ Reports 2004, p, 136, paragraph 120). Moreover, that policy has been repeatedly condemned by the United Nations Security Council, as the Advocate General noted in points 53 and 54 of his Opinion, and by the European Union itself. In that context, it should be underlined that, in accordance with Article 3(5) TEU, the European Union is to contribute to the strict observance of international law, including the principles of the United Nations Charter.”

The CJEU, went on to find that the fact that a foodstuff comes "from a settlement established in breach of the rules of international humanitarian law" may be the subject of ethical assessments capable of influencing consumers' purchasing decisions, "particularly since some of those rules constitute fundamental rules of international law (Advisory Opinion of the International Court of Justice of 9 July 2004, Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, ICJ Reports 2004, p. 136, paragraphs 155 to 159).”

Senators Frances Black, Alice-Mary Higgins, Lynn Ruane and Eileen Flynn wrote to you and An Tánaiste on 3 September 2024. The letter attached a legal opinion by Professor Takis Tridimas and Professor Panos Koutrakos, entitled "Additional Opinion on the Compatibility of the Occupied Territories Bill with EU Law" (the "2024 Tridimas Opinion") in which the authors consider inter alia whether paragraph 278 of the ICJ Opinion supports the conclusion reached by Professor Tridimas in 2018 (the "2018 Tridimas Opinion") that Member States can unilaterally prohibit trade with settlements on grounds of "public policy".

The 2018 Tridimas Opinion formed the view that the Bill was compatible with EU law as the prohibitions contained therein can be justified on public policy grounds pursuant to Article 36 TFEU and Article 24(2)(a) of the 2015 Regulation:

"[T]he prohibitions laid down in sections 6 and 7 of the Bill are justified by the derogation of public policy for the following reasons. First, the Bill seeks to comply with international law, in particular, the Fourth Geneva Convention, Secondly, it seeks to protect human rights, namely the right to self-determination. Thirdly, it is fully in alignment with the avowed objectives of EU law and the Union's political stance on matters of occupied territories”.

The 2024 Tridimas Opinion expresses the view that the ICJ Opinion provides "additional very strong support" for the conclusion reached in the 2018 Tridimas Opinion. The 2024 Tridimas Opinion also diverges from the 2018 AG Advice, by reason of a different interpretation of the relevant EU law. The 2024 Tridimas Opinion is focused on matters extraneous to the 2018 AG Advice.

However. the difference of views highlights that the question of whether the Bill is compatible with EU law is complex and far from straightforward.

As I will go on to explain, the CJEU has never decided whether the public policy exception can be relied on to justify restrictions similar to those in the Bill. While arguments can be made in favour of the exception applying, the case law demonstrates that the public policy exception is construed strictly by the CJEU and is invoked successfully only very rarely.

Thus, if the Bill is enacted it is difficult to advise with certainty what the consequences might be for the State but what is clear is that, if the State seeks to invoke the public policy exception as justification for taking unilateral action in an area of exclusive EU competence, the burden of proof will rest on the State to prove that, in the circumstances, the exception is justified.

EU Trade Law and the Public Policy Exception

Article 2(1) TFEU provides that when the Treaties confer exclusive competence on the EU in a specific area, only the EU may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the EU or for the implementation of EU acts. Article 3(1) TFEU provides that the EU shall have exclusive competence in the areas of the customs union and the common commercial policy, meaning only the EU may legislate and adopt legally binding acts in these areas, unless the EU empowers Member States to do so themselves.

Article 207(1) TFEU provides that the common commercial policy shall be conducted in the context of the principles and objectives of the EU's external action. Similarly, Article 205 TFEU provides that the EU's action in the international arena shall be guided by the principles, pursue the objectives, and be conducted in accordance with, the general provisions laid down of Title V of the Treaty on European Union (the "TEU") which outlines the in Chapter 1 general provisions on the EU's external action.

Article 21(1) TEU provides inter alia that the EU'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".

Article 21(2) TEU provides that the EU:

"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 exteral borders;…”

Article 21(3) TEU obliges the EU to:

“respect the principles and pursue the objectives set out in paragraphs 1 and 2 in the development and implementation of the different areas of the Union's external action covered by this Tile and by Part Five of the Treaty on the Functioning of the European Union, and of the external aspects of its other policies. 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.”

Where the EU has exclusive competence (e.g., on trade in goods), a Member State may not impose additional barriers beyond those defined in EU law. In Werner, the CJEU held that Member States could not lay down their own rules concerning trade with third countries, if this would interfere with the collective rules decided as part of the common commercial policy. In particular, the CJEU held as follows:

"8. Article 113 of the Treaty provides that the common commercial policy is to be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalization, export policy and measures to protect trade.

9. Implementation of such a common commercial policy requires a non-restrictive interpretation of that concept, so as to avoid disturbances in intra-Community trade by reason of the disparities which would then exist in certain sectors of economic relations with non-member countries (see Opinion 1/78 of the Court [1979] ECR 2871. paragraph 45).

10. So, national rules whose effect is to prevent or restrict the export of certain products fall within the scope of the common commercial policy within the meaning of Article 113 of the Treaty.

11. The fact that the restriction concerns dual-use goods does not affect that conclusion. The nature of those products cannot take them outside the scope of the common commercial policy.

12. Since full responsibility for commercial policy was transferred to the Community by Article 113(1), national measures of commercial policy are therefore permissible only if they are specifically authorized by the Community (judgments in Case 41/76 Donckerwolke vs Procucreur de la Republique [1875] ECR 1921, paragraph 32, and Case 174/84 Bulk Oil v Sun International [1986] ECR 559, paragraph 31)”.

Therefore, a Member State may on take national measures in respect of commercial policy if it is specifically authorised by the EU.

Regulation (EU) 2015/478 on Common Rules for Imports

The 2015 Regulation lays down common rules for the import of products into the EU from third countries, the procedure for EU investigations before safeguards are applied, and for surveillance of products that may cause injury to EU producers. Essentially, products should be freely imported into the EU from third countries without being subject to any quantitative restrictions (e.g. quotas), unless there are safeguard measures in place.

The 2015 Regulation provides that the Commission should be informed by Member States of any danger created by trends in imports which might call for EU surveillance or the application of safeguard measures. If the Commission is so informed, it will investigate whether imports of a particular product have increased so much that they cause (or threaten to cause) serious injury to EU producers (i.e. a significant overall impairment in the position of EU producers). and following such investigations the Commission can impose safeguard measures, such as the imposition of quantitative restrictions on imports of the product.

Article 24(2)(a) of the 2015 Regulation provides:

"2. Without prejudice to other Union provisions, this Regulation shall not preclude the adoption or application by Member States of:

a. prohibitions, quantitative restrictions or surveillance measures on grounds of public morality, public policy or public security, the protection of health and life of humans, animals or plants, the protection of national treasures possessing artistic, historic or archaeological value, or the protection of industry and commercial property.”

It is arguable that Article 24(2)(a) represents specific authorisation from the EU for Member States to take national measures of commercial policy in the circumstances described therein. Article 24(2)(a) also provides that the Member States shall inform the Commission of the measures or formalities they intend to introduce or amend in accordance with subparagraph (a). In the event of extreme urgency, the national measures or formalities in question shall be communicated to the Commission immediately upon their adoption.

Article 36 TFEU acts as an exception to the rule in Articles 34 and 35 that quantitative restrictions on imports and exports and all measures having equivalent effect shall be prohibited between Member States. The CJEU has defined quantitative restrictions as

"measures which amount to a total or partial restraint of, according to the circumstances, imports, exports or goods in transit".

Article 36 TFEU provides as follows:

"The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.”

Article 36 provides the legal basis for justifying quantitative restrictions which are discriminatory in nature. The CJEU has interpreted this provision very strictly and wil only allow it to be invoked in very narrow circumstances. In order for a discriminatory quantitative restriction to be justified it must satisfy the following three requirements:

1. It must fall within one of the 6 listed categories;

2. The quantitative restriction must not constitute a disguised restriction on trade between Member States; and

3. The quantitative restriction must not be arbitrarily discriminatory.

The second and third requirements appear in the second sentence of Article 36 TFEU and have been interpreted as meaning that the restriction must be in proportion to the risk presented by the import. The burden of proof under Article 36 TFEU rests with the Member State seeking to rely on it. It is a well-established principle that measures which restrict a fundamental freedom may be justified on public policy grounds only if they are necessary for the protection of the interests which they are intended to secure and only in so far as those objectives cannot be attained by less restrictive measures. It must not be possible to achieve the level of protection required through alternative means that are less restrictive of trade.

The Commission Notice Guide on Articles 34-36 TFEU restrictions exceptional nature of the Article 36 public policy derogation succinctly:

"Public policy is interpreted very strictly by the Court of Justice and has rarely succeeded as a ground for a derogation under Article 36 TFEU. For example, it will not succeed if it is intended as a general safeguard clause or only to serve protectionist economic ends. Where an alternative Article 36 TFEU derogation would apply, the Court of Justice tends to use the alternative or combine a public policy justification with other possible justifications. The public policy justification alone was accepted in one exceptional case, where a Member State restricted the import and export of gold- collectors' coins. The Court held that it was justified on grounds of public policy because it stemmed from the need to protect the, right to mint coinage, which is traditionally regarded as involving the fundamental interests of the state."

The case referred to above, in which the public policy exception was successfully relied on as a standalone defence to a restriction is Thompson, Johnson and Woodiwiss. That case involved a British ban on exporting silver coins, even though they were no longer legal tender, to prevent them from being melted down or destroyed. It was also a criminal offence in the UK to melt down coins and because of this, the Court accepted that a ban on exports was justified on grounds of public policy because it stemmed from "the need to protect the right to mint coinage which is traditionally regarded as involving the fundamental interests of the State".

In Église de scientologie the Court found that the requirements of public policy and public security, as derogations from the fundamental principle of free movement of capital, must:

"be interpreted strictly, so that their scope cannot be determined unilaterally by each Member State without any control by the Community institutions. Thus, public policy and public security may be relied on only if there is a genuine and sufficiently serious threat to fundamental interest of society”.

In Schmidberger, the Austrian authorities permitted a demonstration to take place which closed a motorway for 30 hours and thus impeded the free movement of goods, on the grounds of the fundamental rights of the demonstrators to freedom of expression and freedom of assembly guaranteed by the European Convention on Human Rights and the national constitution. The CJEU found that fundamental rights form an integral part of the general principles of law the observance of which the Court ensures. The CJEU went on to find that since both the EU and its Member States are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies a restriction of the obligations imposed by EU law, even under a fundamental freedom guaranteed by the Treaty such as the free movement of goods.

Although the Court in Schmidberger found that the protection of fundamental rights may justify a derogation from EU law, the precedential value of the case is somewhat limited with respect to the measures contained in the Bill as the circumstances were very different.

The demonstration took place following a request for authorisation as required by national law and after the Austrian authorities had decided to allow it to go ahead. Further, the obstacle to free movement was limited as it related to a single event, on a single route, lasting for 30 hours. Moreover, the demonstrators were motivated by a desire to express their opinion on a matter of public importance and not by a desire to restrict trade in goods of a particular type or from a particular source.

While the Article 36 TFEU exception has been considered by the CJEU on several occasions, the Article 24(2)(a) exception had, until very recently, not been the subject of any decided case. However, in March 2024, Advocate General Ćapeta opined in Confédération paysanne that melons and tomatoes from the territory of Western Sahara must bear a "country of origin" label reflecting their origin in that territory and not that of the "Kingdom of Morocco". On the question of whether France could unilaterally ban the import of such produce on the ground that these did not display the correct country of origin, AG Capeta expressed the view that a ban on the importation of certain products is a policy measure governing trade in goods which is a matter that, according to Article 207(1) TFEU, falls within the scope of the common commercial policy. As the common commercial policy is an exclusive competence of the EU, AG Ćapeta considered that France does not have the competence to impose an import ban unless empowered or requested to do so by the European Union.

Considering Article 24(2)(a) of the 2015 Regulation, AG Ćapeta agreed with France's submission that that this provision leaves open the possibility that Member States will be permitted to introduce unilateral trade measures in exceptional cases. However, she argued that the type of measures envisaged by Article 24(2)(a) must be applied erga omnes in so far as they are directed against members of the World Trade Organization (the "WTO") and thus concern all imports of the product concerned, irrespective of origin. The measure at issue which applied to products originating solely from the Kingdom of Morocco, a WTO member, accordingly could not fall within the scope of that provision.

In its Judgment on 4 October 2024, the CJEU agreed with AG Ćapeta that Article 24(2)(a) allows, for reasons comparable to those referred to in Article 36 TFEU as regards the internal aspect of the single market, for interference with the freedom of imports into the European Union provided for in Article 1(2) of the 2015 Regulation.

However, the Court went on to find that, as is apparent from the very wording of Article 24(2)(a), that the provision is without prejudice to other relevant provisions of EU law. The Court found that, in a case such as that at issue in the proceedings, which concerned the
importation of agricultural products, those other relevant provisions include, inter alia, Article 194 of Regulation No 1308/2013, which reserves to the Commission the power to take safeguard measures in respect of imports into the European Union of products falling within the scope of Regulation No 1308/2013. In the circumstances, the Court found that Article 24(2)(a) could not be understood as empowering Member States to unilaterally adopt safeguard measures in respect of imports of agricultural products.

The measure at issue in Confédération paysanne may be distinguished from the Bill in that France sought to introduce unilateral measures to suspend imports for alleged breaches of EU food labelling requirements, rather than for the considerations which are relevant to the Bill.

In a different but related context, at the end of last year, I nominated counsel to advise the Department of Finance on the EU law implications of the Illegal Israeli Settlements Divestment Bill (the "Divestment Bill"), a Private Member's Bill introduced by John Brady TD. The Divestment Bill proposes to amend the National Treasury Management Agency (Amendment) Act 2014 and to impose new mandatory obligations on the National Treasury Management Agency (the "NTMA") with respect to its management of the Ireland Strategic Investment Fund (the "Fund"). The Divestment Bill provides that the NTMA shall endeavour to ensure that the assets of the Fund are not directly or indirectly invested in any company which is listed on the UN Database of companies operating in illegal Israeli settlements on Palestinian land. The Divestment Bill also provides that where the NTMA becomes aware that a company in which the assets of the Fund are directly or indirectly invested is listed on the United Nations database of companies operating in illegal Israeli settlements on Palestinian land, the NTMA shall divest the assets of the Fund from such investment as soon as practicable.

Counsel emphasised that the Divestment Bill is "radically different in scope and effecI" to the Bill the subject matter of this letter. However, their analysis of the public policy exception (in that case in respect of the free movement of capital in Article 65 TFEU) is worthy of consideration.

Echoing the analysis above, counsel advised that the conditions for invoking a public policy justification are very strict. Counsel advised that the view of the CJEU on whether the State could invoke such exception is far from certain, particularly as the CJEU has previously not had to consider the specific situation discussed above. They considered that, in light of the clear position of the EU, the UN and Ireland that the settlements in the OPT were unlawful and a breach of international humanitarian law, and in light of the escalation of hostilities in the Gaza Strip since 7 October 2023, on balance, the State could successfully invoke a justification grounded on public policy. This would be based, in particular, on the need to promote respect for international law and for the fundamental rights of those adversely affected by its breach, such as the predominantly Palestinian people of the OPT adversely affected by affected by the illegal Israeli settlements on their lands there.

In that regard, counsel highlighted that the EU and its Member States have specifically said hat Israeli settlements in the OPT hinder a peaceful resolution of the conflict. Those settlements manifestly constitute a very serious ongoing breach of international law, including international humanitarian law, which has been recognised by the EU. As a result, it could be argued that the measures proposed in the Bill reflect public policy at both Irish and EU level At paragraph 19 of their opinion, counsel summarised their views as follows:

“Strict conditions must be satisfied before a public policy justification may be successfully invoked. It may be argued, in any challenge to the Bill, if enacted, that this requirement is not satisfied: i.e. that it is not obvious that the Israeli policy and actions in respect of the illegal settlements on Palestinian lands have a concrete negative effect on Ireland, such as to justify Ireland from considering that it is in its fundamental public-policy interest to amend, in a mandatory way, the investment strategy/options open to be pursued by its sovereign fund, regarding the investment of those sovereign funds, so as to preclude their investment in companies recorded officially by the United Nations as being involved in the OPT in listed activities related to, and directly supportive of, the illegal Israeli settlements in the OPT. However, it would be clearly Irish public policy if the Bill is enacted, and it is only in those circumstances that the CJEU could be called upon to consider the compatibility of the legislation. It would furthermore, be a public policy that would be manifestly consistent with that of the EU broadly as regards the illegality of the Israeli settlements in the OPT and one that would be fully consistent with international law (at the very least and assuming there is no concrete obligation in international law ... to go further than merely differentiating Israel's territory from that of the OPT), which condemns the serious, ongoing violation thereof that the illegal settlements represent. …”

While the Bill is acknowledged to be radically different in scope and effect to the Divestment Bil on which Counsel advised, the grounds which would be relied upon to justify the restrictions which they respectively impose are the same in both cases. While it will certainly be more difficult to justify taking unilateral action in an area covered by the exclusive competence of the EU, the reasons for the State's action would be identical to those discussed by counsel.

The possibility of justifying such restrictions must be considered In light of the ICJ Opinion (and Ireland's submissions to the ICJ) on the obligations of all states not to render aid or assistance in maintaining the situation created by Israel's illegal presence in the OPT, and the ongoing humanitarian crisis in the OPT following the attacks on 7 October 2023, in addition to consistent public comments and official statements from the Government and its members strongly condemning the ongoing pain and suffering caused by the ongoing conflict. In that context, similar arguments may be made to justify a prohibition on trade in goods produced in whole or in part within the OPT by an illegal Israeli settler. As the case law makes clear however it is by no means certain that the CJEU, if called upon to decide, would accept such an argument, particularly in light of the extremely strict interpretation given to exceptions to the rules contained in the EU Treaties.

Conclusion

The Government's position on the Bill to date has been that it is incompatible with EU law and the Constitution. The grounds for this position have been outlined and discussed in detail above so I will not repeat them here.

The events of the past year mean that the geopolitical landscape in Gaza and Israel is significantly different to when the Government first adopted a position on the Bill. The question you pose of me is whether the ICJ Opinion has implications for that position.

As discussed, the ICJ opinion is a non-binding but authoritative statement that Israel's policies and practices in the OPT are a breach of international law and Israel's occupation of the OPT is illegal, It advises States that they are under an obligation:

• to distinguish in dealings with Israel between its own territory and the OPT;

• to abstain from entering into economic or trade dealings with Israel concerning the OPT or parts thereof which may entrench its unlawful presence in the territory;

• to take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the OPT; and

• not to render aid or assistance in maintaining the situation created by Israel's illegal presence in the OPT.

The Bill would require the State to take unilateral action in an area of exclusive EU competence by making it an offence to import goods produced in whole or in part within a relevant occupied territory by an illegal settler. The proponents of the Bill argue that the State is entitled to do so on public policy grounds. They argue that, as fundamental rights form an integral part of the general principles of EU law and both the EU and its Member States are required to respect fundamental rights, the protection of those rights is a legitimate interest which, in principle, justifies the State taking unilateral action in these circumstances.

However, as the case law demonstrates, the public policy exception under Article 36 TFEU has been interpreted very narrowly with public policy succeeding as a standalone defence only once in a very different context. That said, it may be open to the State to argue that the proposed offences under the Bill are necessary to uphold respect for the rule of law, the universality and indivisibility of human rights and fundamental freedoms and respect for human dignity. It can also be argued that the ICJ Opinion represents an authoritative statement that Israel's occupation of the OPT is unlawful and a breach of international law and that the offences proposed to be created by the B ill represent the fulfilment by the State of the obligations referred to in the ICJ Opinion.

All of those arguments can be made to justify the restrictions in the Bill. However, it must be acknowledged that the preponderance of the case law would tend to support the argument that unilateral Member State action in an area of exclusive EU competence can only be justified in the most exceptional and narrow of circumstances, albeit that the case law has not
addressed directly the permissibility of unilateral action in precisely the same form as that proposed by the Bill.

If the Bill were to be enacted, 1 must therefore caution that there would be risk that the State would be the subject of infringement proceedings before the CJEU at the instance of the European Commission. In such circumstances, the State would have to justify taking unilateral action in an area of exclusive EU competence before the CJEU in circumstances where its purported justification has only rarely succeeded. This is particularly the case in circumstances where the CJEU has never ruled on whether the exception can be invoked for the specific reasons discussed above.

There is therefore a significant risk that the State will be found to be in breach of EU law if the Bilis enacted. This is exacerbated by the fact that the Bill goes beyond just prohibiting trade with illegal Israeli settlers in the OPT, It will be difficult to argue that the Bill constitutes the least restrictive means possible to achieve the public policy objectives in relation to the illegal settlement and ongoing humanitarian crisis in the OPT if the Minister can, by regulation, and without any principles and policies guarding his discretion, extend the scope of the offences in the Bill to any territory he prescribes as a "relevant occupied territory".

It is also important to acknowledge that, as distinct from the risk that the Bill would be found to be in breach of EU law, the Bill as currently drafted presents entirely different difficulties in respect of its compliance with the Constitution. As discussed above, the Bill authorises the Minister for Foreign Affairs to make regulations under section 4 prescribing a territory as being a "relevant occupied territory" within the meaning of section 3. This provision seeks to grant a very broad power to the Minister without supplying any relevant principles or policies to which the Minister must have regard in determining whether a territory should be designated as a relevant occupied territory. As it is currently drafted, this aspect of the Bill is very likely to be held to be in breach of both Article 15.2.1° and Article 29.4 of the Constitution as it contains no principles and policies to guide the Minister's discretion, and it permits the Minister to exercise a power of the Government as a whole in the field of foreign affairs.

Furthermore, significant practical and legal issues arising under international law as well as the Constitution may also pose difficulties in implementing the extra-territorial application of the Bill in the manner envisaged by section 5(2). While these issues do not relate to the core of the principle underlying the Bill and it may be possible to mitigate these risks through appropriate amendments, they nevertheless remain relevant considerations in any assessment of whether it is warranted for the Government to give its support to the Bill and facilitate its progress to enactment.

In the circumstances, I therefore ultimately agree with my predecessors and advise that there are significant legal difficulties with the Bill that should prevent it from being enacted in its present form.

However, it is clear that the main focus of the Bill, as reflected in the public utterances of the proponents of the Bill and the legal opinions they have furnished, is the illegal Israeli settlements in the OPT. If the Bill was narrowed to a prohibition against trade in settlement goods in the OPT instead of applying the much wider definition of "relevant occupied territory"
which definition could be satisfied in various parts of the world, there would be a much more defensible legal basis for justifying, on public policy grounds, the enactment of national measures prohibiting trade in goods produced in whole or in part within the OPT by an illegal settler.

Such prohibition would differentiate between trade with Israel and the illegal settlements in the OPT so it would not conflict with the EU-Israel Association Agreement which does not cover trade with the OPT. It would also be consistent with the policy positions of the EU and the United Nations outlined above that States should differentiate between Israel and the OPT.

If Ireland were to enact a law prohibiting trade in settlement goods produced in whole or in part within the OPT by an illegal Israeli settler, it could only be found to be in breach of EU law if the Commission or another Member State takes action against the State in the CJEU. The CJEU would then have to rule on whether the law is in breach of EU law or whether it is justifiable on the grounds discussed above. It is far from certain that the Commission or another Member State would have the appetite to take action against the State in light of the ongoing conflict and humanitarian crisis in the OPT and the ICJ Opinion that all states are under an obligation not to recognise as legal the situation arising from the unlawful presence of Israel in the OPT, and an obligation not to render aid or assistance in maintaining the situation created by Israel's illegal presence in the OPT. The likelihood of such proceedings being initiated is something that the Government may legitimately wish to consider in its overall assessment of the issue.

The ICJ Opinion aligns with the long-held position of the EU that the settlements in the OPT are illegal and should not be recognised, Article 21(1) TEU provides that the EU's action in the international arena:

There would therefore seem to be a strong argument that any prohibition on trade with illegal settlers in the OPT is clearly consistent with the guiding principles of the EU for its action on the international scene. There is an equally strong argument for the ICJ Opinion and, in particular, the ongoing humanitarian crisis caused by the conflict in the OPT, to result in action on an EU level, including sanctions on trade with illegal settlers in the OPT.

In conclusion, my advice remains consistent with that of my predecessors that there are significant legal difficulties relating to the Bill as it is currently drafted and that its enactment would be at very substantial risk to the State.

I also agree with previous advice that taking unilateral action in an area of exclusive EU competence can only be done with the authorisation of the EU and the prohibitions in the Bill would involve the State taking such unilateral action., It may however be argued that such authorisation was given by the EU if the circumstances provided for in Article 24(2)(a) of the
2015 Regulation can be said to arise. I also agree with previous advice that the public policy exception is very narrowly construed by the CJEU and is only very rarely successfully invoked.
However, the ongoing conflict and humanitarian crisis that has developed in the OPT since 7 October 2023, in addition to the ICJ Opinion means that the context in which my advice is now sought is substantially different in important respects to the context in which my predecessors were asked to advise.

It is still the case that the State may be challenged before the CJEU for failing to fulfil its obligations under EU law if it were to enact the prohibitions proposed in the Bill, and there is still a significant risk that he State would lose any such challenge, but the developments of the past year may affect Government's assessment of the risk involved in supporting the Bill.

There would certainly appear to be a stronger and more defensible legal basis now than there previously was for the Government to rely on the public policy justification for introducing national measures prohibiting trade in goods from the illegal settlements in the OPT

As stated above, however, if the Government were minded to accept this risk in light of the broader considerations at play and proceed to support the Bill and seek to facilitate its enactment, the Bill as currently drafted would certainly require revision to mitigate the infirmities identified above. lt would be a political choice as to whether to propose Committee Stage amendments to the existing Bill or instead to publish an entirely new Bill, drafted by the Office of Parliamentary Counsel in accordance with its usual high standards.
I am available to advise further as required.

Yours sincerely,

ROSSA FANNING

ATTORNEY GENERAL