Why regulation of sanctions matters

With the recent discovery of a series of Suspected war crimes in Ukraine’s Bukak city and the fear of a new eastern invasion, Western sanctions on Russia have reached new heights. The European Union (EU) is more determined than ever to restrict Russian oil and gas imports, while the US and UK continue to target financial assets and oligarchs.

Seen as the lesser of two evils against a member of the United Nations Security Council (UNSC) and a nuclear power backed by strategic allies, the sanctions provide an efficient alternative to the use of military force. Nevertheless, their harm on human rights and the population has long been demonstrated. Furthermore, in a globalized economy, their medium-term impact on the countries issuing these sanctions can be quite severe. These reasons give rise to the need to regulate and monitor the use of this political tool for economic warfare at the crossroads between international law, trade, investment, or finance, and for which only a few legal scholars other than human rights experts have showed interest. An apparently peaceful legal tool, sanctions may eventually backfire.

What are the restrictions?

Although there is no universal legal definition, a sanction can be defined as a coercive measure of an economic nature, as opposed to diplomatic or military means, taken either collectively or individually by states. Collective sanctions may be imposed by an international organization based on a multilateral (UN) or regional (EU) treaty. The UNSC is at the heart of collective sanctions with its Chapter VII, ‘Action with respect to threats to the peace, breach of the peace, and acts of aggression’. But a strict procedure needs to be followed: the need to first determine “the existence of any threat to the peace, breach of the peace or act of aggression” (Article 39) and then decide to resort to measures that include “its does not include the use of “armed forces” (Article 41). Article 41 states: “These include the complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio and other means of communication and may involve a severance of diplomatic relations.”

The restrictions are not defined nor listed, but the indication is clear. Since 1966, the UNSC has established 30 regimes of sanctions, which have taken a variety of shapes from trade measures to arms embargoes; and financial tools to ban travel. The United Nations stresses the idea that these sanctions cannot work “in a vacuum”, but should be seen as part of a larger mechanism to restore peace and security. There are fourteen sanctions programs supported by the United Nations in the world today. Each of them is administered by a sanctions committee headed by a non-permanent member of the UNSC. More than 30 EU sanctions have been adopted and some of these have already targeted Russia’s previous intervention in Ukraine.

With Russia as a permanent member of the UNSC and a veto power member, the scope of UN action is so limited that its credibility is questioned. Therefore, sanctions are also taken unilaterally, i.e. a treaty by a given state has no basis and often without any legal basis. The US has historically championed this category with the adoption of tools such as a complete embargo, such as a total blockade of trade, travel and financial transactions, and more targeted measures such as the blocking or freezing of financial assets and restrictions on imports or exports. restrict. For example, a licensing system. The authority to take these measures is a matter of domestic law.

However, the question of jurisdiction is particularly sensitive as there is a clear external element to the unilateral implementation of economic restrictive measures. Aware of the controversial nature of these sanctions, the United Nations has established a system of monitoring and, since May 2015, appointed a Special Rapporteur on the negative impact of unilateral coercion on the enjoyment of human rights. In the parlance of the International Law Commission, these unilateral sanctions are called “countermeasures”. Closer to the idea of ​​self-defense, the measure at stake may be described as “self-help” or “self-protection”. However, the question of legitimacy remains and, in a globalized economy made up of international trade and investment interrelationships, the latter may backfire.

when the ban backfires

What if Trade and Investment Tribunals condemned sanctioning states for breach of the treaty? In international economic law, accruing countries enjoy some latitude first. International trade agreements such as the World Trade Organization and various investment treaties provide protection exceptions. These include Article XXI of the General Agreement on Tariffs and Trade (GATT), Article XIV of the General Agreement on Trade in Services (BIS), and Article 73 of the Trade-Related Aspects of Intellectual Property Rights along with bilateral investment treaties. While some regarded these exceptions as ‘self-determination’, recent WTO disputes including ‘Russia – Measures with respect to traffic in transit’ (DS 512) and ‘Saudi Arabia – Protection of the IPR’ ( DS 567), considers these exceptions to be partially justifiable, meaning that the investigation of their legality is not entirely outside the purview of international trade and investment tribunals. Accordingly, even though the policy space available to enforce national security exceptions is considered narrow compared to that of many states, the validity of economic sanctions in the context of war is unlikely to be questioned by trade tribunals.

However, other international tribunals may have a final decision. The Nicaraguan case provides a clear example of the ambiguity and illegality of these measures. Economic sanctions were imposed by the US to achieve political goals in a comprehensive trade embargo against the government of Nicaragua in May 1985. The International Court of Justice ultimately condemned Washington, which argued that the measures were taken in compliance with Article XXI. GATT (national security reason). In the Bank Melat case, the UK also learned the hard price of economic sanctions-related damages as an Iranian bank claimed £1.3bn on trade sanctions damages.

For all these reasons, there is at least a case for proper notification and basic legal due process. Declaring and invoking sanctions cannot be hasty as sanctions not only affect private actors and cause significant economic losses and disruptions in the supply chain (as we see with energy and commodities today), but sanctions Giving states also bear harmful legal consequences in the long run. ,

Lesla Chaucarouane is Professor of International Law and Director of the University of Portsmouth Thematic Areas in Democratic Citizenship and the James J. Nedumpara is Professor and Head of the Center for Trade and Investment Law at the Indian Institute of Foreign Trade, New Delhi, and a Professor at the Jindal Global Law School