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Neutralizing and reinforcing the asymmetries of occupation: The Jerusalem Arbitration Court

On Monday 18 November, the former UK prime minister Tony Blair made an official appearance at the opening ceremony of the Jerusalem Arbitration Center (JAC). After two years of negotiation, the institution was inaugurated on that day in East Jerusalem, following the negotiation between the International Chamber of Commerce (ICC) of Paris, the ICC Israel, and the newly born ICC Palestine. Blair, in his capacity of representative of the Quartet (an alliance between the UN, the EU, the US and Russia whose official goal is to mediate peace talks in the region and to promote Palestinian economic development), gave the blessing of the “rest of the world” to the creation of the JAC as a “viable, mutually acceptable and enforceable Palestinian-Israeli commercial dispute mechanism”. “At a time when there is almost no dialogue between Israel and Palestine at the civic society level”, affirmed Oren Shachor, the chairman of ICC Israel, “we are putting aside our political differences to the benefit of resolving our commercial disputes in both regions”. However, although authors and practitioners are already describing the JAC as a success of arbitration as another way of conducting diplomatic relationships, there is broad scope for alternative interpretations. In particular, the way in which the Center has been created, its intention to “put aside of political differences”, and the role that such “external mechanism” of dispute resolution can play in neutralizing occupation and reinforcing the “exploitative” policy adopted by Israel toward Palestinian resources, require a deep critical scrutiny, an effort that certainly goes beyond the few reflections that I offer here.


The history of the JAC and the economic relationships between Israel and Palestine

The history of the JAC has been presented as an incredible success of negotiations between two parties who tend – at least in the eyes of the rest of the world – not to maintain political and economic relationships. In less than three years, since the idea was originally proposed by the head of ICC Israel, the new ICC Palestine was created in Ramallah, a Memorandum of Understanding was signed between the ICC and its two national committees in May 2011, and the entire Center, composed of a Secretariat, a Court and a Board, eventually inaugurated.

The supporters of this optimistic perspective describe the Center as an external and neutral venue to solve controversies concerning the USD 4 billion of “peaceful and mutually beneficial exchange” that occur every year between Palestinians and Israeli, a “fair, neutral, and reliable dispute resolution for parties from different cultural and legal traditions.” As a consequence, the Center becomes an emblematic representation of commercial arbitration as a mechanism for “global legal harmony” and “peace through commerce”, the sole existing tool to solve disputes in a region of the world where controversies seem to never end.

However, the same events can be interpreted in a different way if the veil of institutional and economic neutrality is pierced and a realistic approach is adopted. Even if we were to leave aside any consideration concerning the links between the JAC’s proponents, the Israeli military, and the Palestinian economic elite, a critical legal approach requires an attempt to go beyond what Laura Nader defines as the “harmony ideology” of ADR, intended as the tendency to present “harmony in the guise of compromise or agreement [as] ipso facto better than an adversary posture.” Such an effort requires to question the way in which Palestinian-Israeli trade relationships are presented, and especially those USD 4 billion of annual exchange and the broader economic context. As a matter of fact, the ICC Israel itself offers data which demonstrate that Palestinians only participate in that relationship as buyers of Israeli products and suppliers of manpower for Israeli enterprises. Therefore, in the majority of the cases Palestinians are the debtor in the “supplier-recipient” relationship, or workers with little or no direct interest in commercial arbitration disputes.

In addition, and despite the lack of any reference in the documents that have been published in the aftermath of the inauguration, Palestine is an occupied country and occupation is central in the way in which Palestinian economy is structured and trade relationships are conducted. For example, a recent report on the economic cost of occupation states that “Israeli military occupation of the Palestinian territory imposes a huge price tag on the Palestinian economy. Israeli restrictions prevent Palestinian from accessing much of their land and from exploiting most of their natural resources; they isolate the Palestinians from global markets, and fragment their territory into small, badly connected, ‘cantons. Moreover, Israel introduced obstacles related to customs, transportations and infrastructures, and assumed a strategy aimed at preventing any Palestinian competition with Israeli economic interests. Starting from East-Jerusalem, the city where the Center will be located.

As in many other circumstances along the recent history of ADR, the “harmony narrative” plays a crucial role in promoting a vision of dispute as exclusively framed by the economic interests of the two parties, as uniquely legal, and as if they were always concerning two equal parties acting in their full capacity of entrepreneurs (business to business relationships). Disputes are thus referred as “commercial”, detached from the rest of the economic and social picture, and presented as needing a neutral venue, rather than a framework capable of taking into consideration the existing party asymmetries. Law, which often intervenes when power and economic interests are in need of protection, becomes the instruments to detach even more the controversies from the reality, and to pretend that occupation does not matter.


A legal bubble in the middle of the Holy Land

Looking at the legal justification of the JAC, it has been presented as functional to providing Israeli and Palestinian businessmen with higher justice, less legal protectionism, and a higher level of judicial enforcement. As a consequence, it is affirmed by the ICC Israel, barriers to Israeli-Palestinian bilateral trade will be removed, and relations between the two sides generally improved. However, this win-win narrative appears biased by the incapacity (or lack of will) to interpret the underlying relationships through the lenses of occupation, and to evaluate JAC’s legal provisions in the light of the specificity of the economic, political, and social context. When all the elements are brought back into the picture, they give an image of the JAC which is far from the “neutral venue for mutual and peaceful encounters”, but rather a tool to overcome specific legal obstacles that affect Israeli interests. Neutrality does not provide a remedy for existing asymmetries, but rather reinforces them by getting rid of local remedies aimed at counterbalancing the position of economic and legal subordination.

Entering more into the details, the introduction of the JAC should help parties to overcome the use of Israeli law and the choice of Israeli courts. In this way, it is assumed, Palestinians would have easier access to proceedings than they currently have when they are held in Israel, and Israeli businessmen would be provided with a solution to overcome the “extreme hostility” of Palestinian courts to Israeli parties and obtain the enforcement of the rendered award within Palestine. In order to solve these two problems, the JAC proposes to “neutralize” the law and the forum of the business relation, so to artificially detach the relationship from the underlying economic and political situation. However, the advantages do not seem to be equally distributed among the parties. A critical approach to the de-territorialization of controversies demonstrates the role that JAC could play in depriving Palestinian courts with almost any possibility to utilize their internal procedure and substantive law in a way that may take into consideration the difference in bargaining power and party autonomy. With no participation of Palestinian courts or of Palestinian law, the uniqueness of occupation can neither be triggered as an exception nor as a judicial defence, and therefore loses any relevance. Technical solutions reveal their economic and political charge.

Starting from the choice of law and the choice of forum, the JAC decided to adopt ICC rules and French law as the applicable law, a solution that makes possible to introduce a provision, contained in the French Code of Civil Procedure since 2011, according to which the parties expressly wave their right to set aside the award in the French courts. Therefore, parties lose the possibility to have an external control over the possible mis-adjudications and mis-interpretations of the law applicable to their relationship. Secondly, the choice of East-Jerusalem as the seat of the hearings can hardly be considered a neutral and equally beneficial provision, mainly because since its occupation in 1967, that part of the Holy City has been facing an array of restrictions that reinforce and accelerate its segregation from the rest of the West Bank. The possibility to access East Jerusalem for the Israeli and Palestinian parties is certainly not the same, although it may be easier for Palestinian to access East Jerusalem than Israel.

Moving to the possibility of an ex-post judicial scrutiny, the objective of the JAC is to enhance the enforcement of the awards by reducing the possibility of national courts’ intervention. This aim represents, in my opinion, the crucial reason behind the creation of the Center. However, an apparently neutral objective that has to be read in the light of the asymmetries that are sketched above and of the fact that, although judgements issued by Israeli courts against or in favor of Palestinian counterparts can normally be enforced within Israel, the situation is not so straightforward in the Occupied Territories, where Palestinian courts seem not to enforce judgements in favor of Israeli counterparts.

In economic terms, Israeli creditors have much more to lose in starting a civil law suit against Palestinians in Palestine, than the other way round. In the light of the parties’ positioning and their interests, the introduction of an ADR mechanism which denies the possibility to set aside awards, that can be enforced on the basis of the 1958 New York Convention, and the current attempt to reform the Palestinian Arbitral Code adopted in 2000 in order to reduce the possibilities for national courts to review awards rendered within the JAC and to increase straightforward enforceability, lose their pretended neutrality and assume strong economic and political implications.


Conclusion: Putting aside “political differences” and expanding the economic occupation

As Laura Nader and Ugo Mattei write in their book Plunder: When the Rule of Law is Illegal (Blackwell Publishing, 2008), Alternative Dispute Resolution practices are harmony ideologies that “may be utilized to suppress people’s resistance, by socializing them toward conformity by means of consensus, cooperation, passivity, and docility, and by silencing people who speak out angrily.” Harmony and neutrality are the rhetorical weapons that hide the concrete consequences of treating business relations as they were simply business relations, and that make the observer lose sight with the allocative implications of ADR. However, in the specific case of the JAC, the politic/law/economic links are even denser.

The creation of a link between the establishment of the JAC and “economic peace” not only risks to maintain existing asymmetries and favor the stronger economic party, but also to divert attention from the underlying political process, and to legitimize the preservation and reproduction of the economic asymmetries created by means of military occupation and almost fifty years of what the Special Rapporteur on the situation of human rights in the Palestinian territories occupied, John Dugard, has openly compared to colonialism and apartheid. Palestinian economy certainly needs to be relaunched and strengthened, but – first of all – it needs to be released from the stranglehold that occupation maintains over Palestinian trade with the world and over Palestinian life in general.

Maybe, part of the Palestinian elite will receive benefits from the possibility to utilize arbitration in order to resolve their disputes with Israeli partners. However, the positive effects for some risk to be overcome by the broader and harder loss for the Palestinian society at large, that is the conclusion by some of their representatives of a next step in the normalization of occupation. Master-slave relationships cannot be simply improved and mitigated, but need to be constantly put into discussion. Political differences cannot be put aside, and any attempt to remove them from the pictures can only favor the status quo.

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Tomaso Ferrando

Tomaso Ferrando

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