The European Court of Justice annuls the Commission’s refusal to register a Citizens’ Initiative calling for the regulation of EU trade with occupied territories

In the judgment Moerenhout and others v Commission, delivered on May 12, 2021, the General Court of the Court of Justice of the European Union (GCUE) ruled on a European Citizens’ Initiative (ECI) calling upon the European Commission to adopt measures to regulate trade with occupied territories. The Court found the Commission violated its obligation to provide with adequate reasons for its initial refusal to register the ECI and, accordingly, annulled that decision.

Update, 24 September 2021: On 8 September, following the decision of the Court of Justice of the European Union, the European Commission registered an ECI that calls to end trade with illegal settlements in occupied territories such as Palestine and Western Sahara. By registering this ECI, the Commission recognised that ending trade with illegal settlements is not a sanction but a trade measure, and that it is therefore competent to legislate on this issue. The seven citizens will now be able to launch their ECI, that will take the form of a petition, to push the Commission to stop trade with settlements. 1 million signatures will be needed to achieve that goal.

The Initiative, titled “Ensuring Common Commercial Policy conformity with EU Treaties and compliance with international law”, was filed in July 2019 by seven EU citizens seeking to bring EU trade in line with the Union’s international law and fundamental rights obligations. The ECI asked the Commission to adopt a measure on the basis of article 207 Treaty on Functioning of the EU (TFEU), under the Common Commercial Policy, to prevent EU legal entities from both importing products originating in illegal settlements in occupied territories and exporting to such territories. Such a measure would ensure the respect of the occupied people’s sovereignty over their territories and bring certainty to EU economic operators dealing with their counterparts from those territories, while preserving the integrity of the trade flows between the EU and the internationally recognized territory of the occupying State.

However, the Commission formally refused to register the ECI application in September 2019, arguing the proposed measure consisted of sanctions (or “restrictive measure”) under the Common Foreign and Security Policy (CFSP), to be adopted by the Council of the EU on the basis of article 215 TFEU. For this reason, on November 14, 2019, the seven citizens who initiated the ECI lodged an action before the General Court of the EU, asking for the annulment of the Commission’s refusal. First, this action argued the Commission distorted their ECI application whereby no reference to article 215 TFEU was provided therein, thus infringing the citizens’ right to good administration under article 41(1) the EU Charter of Fundamental Rights. Second, the action alleged the violation of the Commission’s obligation to state adequate reasons laid down in article 4(3) of the Regulation on European Citizens’ Initiatives. Third, it was argued that the measure proposed in the ECI application consisted of trade measures to be adopted on the basis of article 207 TFEU, under the Common Commercial Policy, thus clearly falling under the Commission’s competence. Fourth, the action argued that, by exclusively focusing on article 215 TFEU, the Commission fully ignored all other possible legal bases to be invoked for the adoption of the measure envisaged in the ECI.

The Court found that the Commission failed to state adequate reasons for its refusal to register the ECI and, consequently, annulled that decision. The Commission’s unmotivated refusal to register the ECI undermines the right of EU citizens to engage a political debate on the issue of EU trade with occupied territories: on the one hand, the Commission’s negligent conduct risks jeopardizing the very essence of European Citizens’ Initiatives, that is, encouraging citizens’ participation in democratic life and making the Union more accessible. On the other hand, the lack of sufficient elements justifying the Commission’s decision precludes both the applicants from knowing the reasons behind the refusal and the Court itself from reviewing the legality of it. Even though the Court did not decide on the merits of the action, the judgment is significant because it does not rule out the possibility that the Commission has the competence to register the ECI. The Commission is now bound to comply with the Court’s ruling and provide with a new decision on the ECI, or otherwise bring an appeal before the Grand Chamber.

The ELSC welcomes the General Court’s ruling for upholding the Union’s fundamental pillars of democratic participation and rule of law, reaffirming the EU citizens’ right to constructively engage with political issues pertaining to the field of trade and human rights. The ELSC has assisted the seven EU citizens in the preparation of the Initiative in its initial stage and with legal research and analysis in support of the citizens throughout the proceedings.

Photo: Court of Justice of the European Union