Guest Post: Ireland’s groundbreaking ‘Control of Economic Activity (Occupied Territories) Bill, 2018’ – Part II

Very pleased to share Part II of this guest post by Gerry Liston, a legal officer with the Global Legal Action Network and Sadaka – the Ireland Palestine Alliance, who has worked with Senator Frances Black on the drafting and other legal aspects relating to the Occupied Territories Bill.

Part I of the guest post is available here.

Government refusal to issue a Money Message

In justifying his refusal to issue a Money Message, the Tánaiste (deputy Prime Minister) and Minister for Foreign Affairs Simon Coveney, stated in the Dáil:

the Bill creates new criminal offences, with consequent costs relating to the investigation and prosecution of crimes, as well as the prison system. If the Bill were enacted, it is anticipated costs would arise because of EU legal proceedings against the State as well as fines and daily penalties relating to infringements. Costs are also likely to arise as a result of private legal action against the State.

There are, in other words, two grounds on which the Government is seeking to block the enactment of the Bill – the cost of implementing it and the supposed financial implications that would result from what the government claims is the Bill’s incompatibility with EU law.

With regard to the first ground, the Government is, in effect, expressly acknowledging that it intends to frustrate the will of the Oireachtas on the basis of the relatively trivial costs involved in giving implementing the Bill.

The second justification for withholding a Money Message stems from the Government’s view, which it says is supported by an (unpublished) opinion of the Attorney General, that the Bill is incompatible with EU law. Senator Black has however relied on opinions from three eminent lawyers, including one sought on the Occupied Territories Bill specifically, which state that banning settlement goods and services is compatible with the “public policy” basis under EU law by which Member States may, in exceptional circumstances, unilaterally derogate from the EU’s trade rules. Ultimately, the question as to whether a Member State is entitled to unilaterally prohibit trade in settlement goods and services originating in settlements illegally established on occupied territories is one which must be resolved by the European courts. A separate question entirely is whether Ireland would be exposed to fines or compensation claims were the Bill found by those courts to be incompatible with EU law. A cursory overview of the relevant EU law makes it absolutely clear that it would not.

There are two ways in which the Bill, on enactment, could be challenged before the EU’s courts. Firstly, by the Commission initiating infringement proceedings against the State in respect of it and, secondly, by a private individual or company affected by it challenging its compatibility with EU law. In the case of Commission-initiated infringement proceedings, were the Bill to be declared incompatible with EU law by the Court of Justice of the EU, under Article 260 of the Treaty on the Functioning of the EU the State would then be given an opportunity to repeal or amend the Act so as to comply with the decision of the Court. This is something the government could easily and immediately do pursuant to its powers to ensure consistency between EU and Irish law under the European Communities Act, 1972.  It is only if the government failed to take the necessary corrective action that the State could then be brought back to the Court of Justice by the Commission and fined by the Court.

The second way in which a Member State can be exposed to financial liability for breaching EU law is if it is sued by someone who suffers a loss as a result of that breach. According to well established principles of EU law the State will only be liable for such a breach if it “manifestly and gravely disregarded the limits on its discretion” under EU law.  Applying this test, the Irish Supreme Court has recently held that where a question of EU law gives rise to “complex considerations that [are] not expressly covered by the terms of [the provision of EU law in question],” the State cannot be liable in damages for breaching it.  Even taking the government’s legal position at its height, it is beyond doubt that the question of whether prohibiting trade with illegal settlements complies with the “public policy” exemption is something which is not expressly covered by EU law. Therefore, according to the test outlined by the Supreme Court, were the Bill (on enactment) found not to satisfy the public policy exception, it is inconceivable that this would give rise to an entitlement to compensation on the part of a person who was affected by its provisions (unless of course the government refused to use its powers referred to above under European Communities Act, 1972 following an unfavourable decision from the European courts).

The government’s attempts to block the enactment of this Bill on these grounds is therefore extremely disappointing. Nonetheless, whether or not it is successful in blocking its enactment prior to the dissolution of the current Dáil, it can do nothing about the fact that the Occupied Territories Bill has set a new watermark in Irish politics in relation to trade with occupied territories.

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