Exploring the Limits of Rebus Sic Stantibus Under Article 50 of the Treaty on EU

https://doi.org/10.63189/OPPI9060

As Machiavelli stated, a prince cannot keep his word when it puts him at a disadvantage and when the reasons for which he made the promise have ceased to exist. The positive law principle of rebus sic stantibus as a reason for non-performance of international obligations has a long history. The Vienna Convention on the Law of Treaties formalises the principle as an exception the materialisation of which in practice interferes with the general principle of pacta sunt servanda and, therefore, its application can naturally occur only in exceptional cases.^[1]

Article 61 of the Vienna Convention establishes the conditions that must be cumulatively fulfilled in order to invoke a fundamental change of circumstances for the purpose of termination or withdrawal from the treaty. It must be a fundamental change that has arisen in the circumstances in comparison to those that existed at the time of the conclusion of the contract and were not previously foreseen by the parties. The existence of these circumstances at the time of the conclusion are considered to have constituted an essential basis for the consent of the parties to be bound by the contract, and the change must be one that  fundamentally transforms the extent of the obligations still to be performed under the treaty. Conversely, it cannot be invoked in the event of two exceptions: on the one hand when the treaty establishes national boundaries, and on the other hand, when the change in question is the result of a breach, by the party invoking it, of an obligation under the treaty or of any other international obligation owed to any other party to the treaty.^[2] The second exception essentially materialises the principle ex turpi causa non oritur actio.^[3]

We agree with the view that this is not a principle of interpretation, but a substantive principle of law that allows exemption from a contractual obligation, regardless of the intention of the parties. However, intention is decisive in determining the circumstances that a party considered to be fundamental, and that constitutes a fundamental change in the context of the clause. The objective nature of the change is, therefore, legally based on the intention of the parties.^[4]

The International Court of Justice (hereinafter referred to as “the ICJ”) has stated that Article 61 of the Vienna Convention contains a rule where the customary rule-making process has been consummated.^[5] Although it is clear that its applicability in practice will be mainly to contracts concluded for an indefinite period, it is not excluded from application even in the case of contracts signed for a definite period.^[6] In the well-known case of Gabčíkovo-Nagymaros, the ICJ confirmed that the application of the principle is only possible in exceptional cases.^[7] Naturally, otherwise, the degree of legal uncertainty in the performance of obligations under international treaties would increase significantly. In the same judgment, the Court also dealt with the question of political conditionalities, stating that they were not so closely linked to the object and purpose of the treaty as to constitute an essential basis for the consent of the contracting parties and, when changed, did not significantly alter the extent of the obligations still to be fulfilled. The precision of the condition of foreseeability of the invoked change of circumstances was also assessed. The ICJ also took into account the possibilities of the treaty in question to reflect the resulting change by means of one of its provisions.^[8]

From the foregoing, it may be presumed that the change of circumstances envisaged by the international treaty in question would hardly fulfil all the conditions, particularly the condition of unforeseeability under Article 61 of the Vienna Convention. Based on the Gabčíkovo-Nagymaros decision, it is not possible to rule out entirely the impact of political considerations on a substantial change of circumstances, to the extent that, for example, a change of government could undermine consistency with the principles underlying the treaty in question.^[9] Scholars point out that it is important for the principle to be associated exclusively with state sovereignty, according to which it is solely for the state invoking the substantial change to determine whether it is applicable in a particular case.^[10]

Although the rule contained in Article 61 of the Vienna Convention can be considered objective in terms of its criteria, it does not provide for the automatic termination of a treaty.^[11] International law experts point out that it would be misleading to think only in terms of termination or withdrawal from the treaty. The principle of rebus sic stantibus can also produce less radical consequences, such as revising the treaty or adapting it to new circumstances.^[12]

The International Law Commission has also addressed the question of the time limit for the application of Article 62 of the Convention. The possibility of invoking a fundamental change of circumstances for the purpose of termination or withdrawal from the treaty must be exercised within a reasonable period of time from the moment when the fundamental change occurred. Failure to comply with this condition allows the other parties to continue requiring the performance of obligations under the treaty, as it would leave the fundamentality as a conditio sine qua non in dispute.^[13]

To what extent can rebus sic stantibus be applied in the case of international organisations concerning the treaties establishing these organisations? It should be noted that this question is relevant not only in the context of modern regional or global integration organisations. As early as 1966, France invoked the exception through a substantial change of circumstances to withdraw from NATO. General de Gaulle argued that the NATO alliance had evolved beyond the scope defined in the treaty and operated under circumstances different from those of 1949, utilising the doctrine to strengthen France’s sovereignty.^[14] Although the withdrawal in question had certain specific features, in light of what has been discussed so far, it is undeniable that political considerations also permeated the decision to withdraw unilaterally.

Before addressing the question of the impact of the principle of rebus sic stantibus on the EU’s founding treaties, it should be remembered that the Court of Justice has consistently held that the Union’s powers must be exercised in compliance with international law.^[15] It has also explicitly confirmed that “‘the rules of customary international law concerning the termination and the suspension of treaty relations by reason of a fundamental change of circumstances are binding upon the Community institutions and form part of the Community legal order.’”^[16] However, the present case cannot be generalised to the founding treaties since the judgment in question concerned external agreements of the Union.

In the context of the founding treaties of the European Union, it can be generally stated that they are governed by the regime of the Vienna Convention on the Law of Treaties, albeit with a specific status compared to other international treaties. The Community, now the Union, was established for an indefinite duration, with Member States relinquishing certain sovereign rights in its favour and transferring part of their sovereignty, in defined areas, to the Union. The Court of Justice of the EU has affirmed that this transfer constitutes a definitive limitation for the sovereign rights of the Member States, which cannot be unilaterally abrogated by subsequent acts incompatible with Union law.^[17] This established a new legal order under international law.

Within the framework of EU law, therefore, the sole mechanism for withdrawal is the activation of Article 50 of the Treaty on the European Union, introduced by the Lisbon Treaty revision and utilised by the United Kingdom in practice. From the perspective of EU law, it may appear that situations where the principle of rebus sic stantibus could potentially be invoked within the bounds of public international law are addressed by separate articles in the founding treaties, which allow for adaptation to defined changes in circumstances.

Based on the foregoing, it is indisputable from the perspective of international law that Member States, as sovereign entities under public international law, may unilaterally withdraw from their obligations under international treaties pursuant to the rebus sic stantibus doctrine, provided that the specified requirements are met. From the viewpoint of Member States, the founding treaties are international treaties. However, from the perspective of EU law, these treaties are distinct from ordinary international treaties as they establish the primary law of the Union, standing at the apex of the Union’s legal hierarchy. Consequently, it remains debatable how the doctrine of rebus sic stantibus could materialise in practice in the case of the EU’s founding treaties.

It should be noted that the European Union respects international law,^[18] and the Court of Justice of the European Union has addressed the principle of rebus sic stantibus in its case-law^[19] on several occasions, although never in the context of a Member State’s unilateral withdrawal from the founding treaties. The most extensive treatment of this doctrine was in the Racke judgment, where, on the basis of a fundamental change of circumstances, the Court permitted the adoption of restrictive measures against “those parties which did not observe the Ceasefire Agreement of 4 October 1991 which they had signed in the presence of the President of the Council and the President of the Conference on Yugoslavia.” In this judgment, the Court tacitly affirmed that the doctrine itself, as opposed to the related specific procedural requirements, constitutes an international custom.^[20]

Although the Union’s founding treaties do not provide a legal basis for the activation of the doctrine in relation to those treaties, this does not constitute an obstacle per se, since the doctrine derives from the rules of public international law, as discussed in the first part of this paper. The possibility of withdrawal from the Union, as the only means of terminating membership introduced by the Lisbon revision of the Treaties, presupposes a consensus, a necessity that is absent in the application of rebus sic stantibus. Therefore, from the perspective of Union law, it is plausible to conclude that withdrawal from the Union on the basis of a unilateral invocation of the doctrine of rebus sic stantibus was unlikely to be envisaged.

Some authors point to the conceptual incompatibility of the doctrine of rebus sic stantibus with EU law and, probably correctly, argue that it would not withstand Union legal assessment.^[21] However, such an argument cannot in itself limit the sovereign rights of individual states to invoke the doctrine. Conversely, by establishing the present Union, Member States have permanently limited the part of their sovereignty that has been conferred upon the Union.^[22]Therefore, it should be noted that within the scope of the competences conferred upon the Union, the application of the doctrine of rebus sic stantibus by Member States cannot be asserted against the exercise of those competences by the Union. As some authors have noted, the situation might differ if the Union acted ultra vires, in contravention of the Treaties themselves. In such a scenario, where recourse to available mechanisms would be ineffective, a Member State might find itself with no option but to respond to the situation by unilaterally withdrawing.^[23]

Additionally, it remains debatable whether the doctrine could be activated in exceptional situations. A key condition of the doctrine is unforeseeability. If circumstances arise that the Treaties anticipate and address, the conditions for the applicability of the doctrine are unlikely to be met. For example, Article 4(2) of the Treaty on European Union addresses respect for national identity and designates national security as the sole responsibility of the Member State. Similarly, other potential circumstances, such as internal “disturbances affecting the maintenance of law and order, in the event of war, serious international tension constituting a threat of war, or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security,” are envisaged by the Treaties, which allow for measures to be taken in derogation from the Treaty.^[24] By anticipating these situations and providing for specific solutions, the unforeseeability requirement, a sine qua non for the application of rebus sic stantibus, remains unfulfilled.

Equally, the doctrine cannot be invoked on the grounds that a Member State is breaching the Treaties, as the Treaties provide mechanisms to address such situations. Should a Member State seriously violate the values enshrined in the Treaties and should the available mechanisms prove ineffective, Article 7 of the Treaty on European Union provides a legal basis under which certain rights under the Treaties may be suspended in relation to that Member State.^[25]Moreover, the Court of Justice of the European Union has repeatedly confirmed that, within the context of European Union law, the principle of reciprocity, as known in international law for breaches of international obligations, cannot apply between Member States in the event of a breach of European Union law by a Member State.^[26]

Therefore, in the cited situations, we concur with the authors who argue against the application of the doctrine in cases where the treaties anticipate and adequately address the issues.^[27] One potential pathway to establishing unforeseeability in these situations could be when all available mechanisms fail, leaving the State to invoke the doctrine as a last resort. The unforeseeability in this scenario would stem from the treaties not contemplating the failure of all the Union’s recourse mechanisms. At the same time, it is conceivable that it could be used in situations that the treaties do not foresee, which are difficult to find in practice. Nevertheless, in each instance, apart from unforeseeability, all the conditions for the application of the doctrine of rebus sic stantibus under international law must be met cumulatively.

Since another condition for the doctrine’s applicability is that it must be invoked within a reasonable period of time following the fundamental change of circumstances, this requirement will not be satisfied in the context of a long-standing Union policy. As noted above, compliance with the condition of fundamentality would remain questionable. In the article, we have also discussed changes in political considerations, such as France’s invocation of this doctrine in relation to NATO in 1966.^[28] Under such circumstances, it is conceivable that these conditions could be met. However, within the Union, it is challenging to identify a specific situation that would, from a legal standpoint, sufficiently satisfy all the conditions of the doctrine of rebus sic stantibus while also being unforeseen by the founding treaties.

Therefore, we must again refer to the Gabčíkovo-Nagymaros case, where it was acknowledged that the impact of political considerations on the application of rebus sic stantibus cannot be entirely ruled out, particularly in instances where a change of government undermines compliance with the principles upon which the relevant treaty is based.^[29] However, in order for such a reason to bring a change in Union policy, it is possible to envisage that all the conditions of the doctrine would be satisfied, particularly in the case of ultra vires Union actions. It is more plausible to envisage the doctrine being invoked in extra-Union cases relating to the European Union’s actions, which may involve relations with third countries or external measures taken by the Union.

To conclude, the mere fact that the founding treaties do not explicitly provide for the doctrine of rebus sic stantibus does not affect its existence within the rules of public international law, which are respected by the Union. However, its application is significantly limited by the specific features of Union law and the status of the founding treaties. Considering all the conditions required by international law for the application of rebus sic stantibus, it can be asserted that neither the EU’s long-standing policies nor the situations envisaged by the founding treaties would formally fulfil those conditions.

The situation is different in cases not anticipated by the founding treaties that may simultaneously meet all these conditions, or in cases where, although envisaged by the treaties, all available mechanisms fail, leaving the Member State with no other option. We also hold the opinion that, given the European Union’s ability to act only within the limits of the competences conferred upon it by the Member States, if the Union were to act ultra vires, the conditions for a Member State to activate the doctrine of rebus sic stantibus in relation to the other contracting parties to the treaties establishing the Union could be met under certain circumstances.

^[1]United Nations, Committee of the Whole, 1986. Extract from Volume I of the Official Records of the United Nations Conference on the Law of Treaties between States and International Organisations or between International Organisations (Summary records of the plenary meetings and of the meetings of the Committee of the Whole). [online] Document:-A/CONF.129/C.1/SR.21.

Available at: https://legal.un.org/diplomaticconferences/1986_lot/docs/english/vol_1/a_conf129_c1_sr21.pdf. Last accessed on 30 Jun 2024.

^[2]art. 61 of The Vienna Convention on the Law of Treaties (hereinafter referred to as “the Vienna Convention”)

^[3]Case Factory at Chorzow (Germ. v. Pol.), 1927 P.C.I.J. (ser. A) No. 9 (July 26), para. 31.

^[4]SHAW, M. N., FOURNET, C. 2011. The Vienna Conventions on the Law of the Treaties. A Commentary. Vol. II. Edited by: CORTEN, O., KLEIN, P. New York: Oxford University Press, 2011. p. 1415, 1424.  ISBN 978-0-19-957353.

^[5]Case Fishekies Jurisdiction (United Kingdom v. Iceland), Judgment, 2 February 1973, ICJ Reports 1973, para. 40.

^[6]SHAW, M. N., FOURNET, C. 2011. The Vienna Conventions on the Law of the Treaties. A Commentary. Vol. II. Edited by: CORTEN, O., KLEIN, P. New York: Oxford University Press, 2011. p. 1420.  ISBN 978-0-19-957353.

^[7]Case Gabčíkovo-Nagymaros Project (Hungary/Slovakia), Judgment, 25 September 1997, ICJ Reports 1997, para. 51.

^[8] Ibid., para 104.

^[9]BROWNLIE, I. 2013. Princípy medzinárodného verejného práva. Bratislava: Eurokódex, s.r.o. a Paneurópska vysoká škola, 2013. p. 675. ISBN 978-80-89447-64-0.

^[10]SHAW, M. N., FOURNET, C. 2011. The Vienna Conventions on the Law of the Treaties. A Commentary. Vol. II. Edited by: CORTEN, O., KLEIN, P. New York: Oxford University Press, 2011. p. 1426.  ISBN 978-0-19-957353.

^[11]BROWNLIE, I. 2013. Princípy medzinárodného verejného práva. Bratislava: Eurokódex, s.r.o. a Paneurópska vysoká škola, 2013. p. 375. ISBN 978-80-89447-64-0.

^[12]United Nations, Committee of the Whole, 1986. Extract from Volume I of the Official Records of the United Nations Conference on the Law of Treaties between States and International Organisations or between International Organisations (Summary records of the plenary meetings and of the meetings of the Committee of the Whole). [online] Document:-A/CONF.129/C.1/SR.21.

Available at: https://legal.un.org/diplomaticconferences/1986_lot/docs/english/vol_1/a_conf129_c1_sr21.pdf . Last accessed on 30 Jun 2024.

^[13]SHAW, M. N., FOURNET, C. 2011. The Vienna Conventions on the Law of the Treaties. A Commentary. Vol. II. Edited by: CORTEN, O., KLEIN, P. New York: Oxford University Press, 2011. p. 1427.  ISBN 978-0-19-957353.

^[14]DHONDT, F. 2013. Charles de Gaulle, Anti-Hegemonic Discourse and International Law. [online] Available at: https://forhistiur.net/2015-03-dhondt/#notes_n0 Last accessed on 30 Jun 2024.

^[15]Judgment of the Court of 3 September 2008., Kadi a Al Barakaat International Foundation/Rada a Komisia, C-402/05 P a C-415/05 P, EU:C:2008:461, para. 291.

^[16]Judgment of the Court of 16 June 1998, Racke v Hauptzollamt Mainz, C-162/96, EU:C:1998:293, para. 46.

^[17]Judgment of the Court of 15 July 1964, Costa/E.N.E.L., C-6/64, EU:C:1964:66.

^[18]art. 3 (5) of the Consolidated version of the Treaty on European Union (OJ C 326, 26.10.2012, p. 13–390).

^[19]E.g. Judgment of the Court of 3 March 2009, Commission v Sweden, C-249/06, EU:C:2009:119.

^[20]Judgment of the Court of 16 June 1998, Racke v Hauptzollamt Mainz, C-162/96, EU:C:1998:293, para. 58,59.

^[21]Athanassiou, P. (European Central Bank), 2009. Withdrawal and Expulsion from the EU EMU: some reflections [online]. Legal working paper series, no 10 / December 2009. Available at: https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp10.pdf. Last accessed on 30 July 2024.

^[22]Judgment of the Court of 15 July 1964, Flaminio Costa v E.N.E.L., C6/64, EU:C:1964:66.

^[23]Athanassiou, P. (European Central Bank), 2009. Withdrawal and Expulsion from the EU and EMU: some reflections [online]. Legal working paper series, no 10 / december 2009. Available at: https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp10.pdf. Last accessed on 30 July 2024.

^[24]art. 347 of the Consolidated version of the Treaty on the Functioning of the European Union (OJ C 326, 26.10.2012, pp. 47–390).

^[25]art. 7 of the Consolidated version of the Treaty on European Union (OJ C 326, 26.10.2012, p. 13–390).

^[26]Judgment of the Court of 11 January 1990, Blanguernon, C-38/89, EU:C:1990:11, para. 7,8.; Judgment of the Court of 26 February 1976, Commission v Italy, C-52/75, EU:C:1976:29, para. 11.

^[27]Athanassiou, P. (European Central Bank), 2009. Withdrawal and Expulsion from the EU and EMU: some reflections [online]. Legal working paper series, no 10 / December 2009. Available at: https://www.ecb.europa.eu/pub/pdf/scplps/ecblwp10.pdf. Last accessed on 30 July 2024.

^[28]DHONDT, F. 2013. Charles de Gaulle, Anti-Hegemonic Discourse and International Law. [online] Available at: https://forhistiur.net/2015-03-dhondt/#notes_n0. Last accessed on 30 June 2024.

^[29]BROWNLIE, I. 2013. Princípy medzinárodného verejného práva. Bratislava: Eurokódex, s.r.o. a Paneurópska vysoká škola, 2013. p. 675. ISBN 978-80-89447-64-0.