Is Psagot Drinking Alone? Application of the CJEU Psagot Judgement To Other Territories The EU Considers Under Occupation

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In the second half of the twentieth century and the early twentyfirst century, a new phenomenon emerged in the international system: territorial conflicts that do not find closure. The establishment of the United Nations, and the formal adoption of the principle of inviolability of borders and inadmissibility of use of force to change them, has created an increase in protracted conflicts. As a result, close to a dozen territories around the world have been controlled for decades by forces which are not widely recognized as the sovereign over the territories.¹ Yet economic activity still takes place in these territories. The November 2019 Court of Justice of the European Union (“CJEU”) judgment in Organisation juive européenne and Vignoble Psagot Ltd v. Ministre de l’Économie et des Finances (“Psagot”) relates to trade with a territory of this type.² The Psagot case covered trade between Israeli controlled areas, the West Bank, East Jerusalem and the Golan Heights, and the EU.³

In Psagot, the CJEU upheld that exporters of goods produced in Israeli settlements, in the West Bank, East Jerusalem, and the Golan Heights, and imported into the EU could not designate as country of origin “Products of Israel” on consumer products labels, since the EU does not recognize Israel’s jurisdiction over these territories.⁴

This article examines the question of whether this judgment should be applied to other territories where the EU does not recognize the jurisdiction of occupying powers. Has the CJEU established a new standard that goods imported into the EU produced in settlements in occupied zones must be labeled as such, or is this a lex specialis judgment specific to Israel? There are several regions in close proximity to Europe where the EU does not recognize the occupying power’s sovereignty or jurisdiction over these territories, including six regions occupied by Russia and Armenia’s occupation of Nagorno-Karabakh and other territories of Azerbaijan.⁵

Among those cases, Armenia’s occupation of territories of neighboring Azerbaijan is particularly relevant. The Republic of Armenia captured Nagorno-Karabakh and seven other territories of Azerbaijan from the Republic of Azerbaijan during the 1992-1994 war between the two states.⁶ These territories remain under Armenia’s occupation.⁷ Armenia, like Israel, conducts an extensive settlement project in the territories it occupies.⁸ These territories are recognized by the UN, US, EU, and other European states as lawfully part of Azerbaijan, and Armenia is not recognized as having jurisdiction or sovereignty over the territories.⁹ Many of Armenia’s settlements produce products that are imported into the EU. However, as will be shown in this article, products from Armenian settlements in Azerbaijan’s territories are labeled and marketed throughout the EU as “Product of Armenia.”

Brenda Shaffer is senior advisor for energy at the Foundation for Defense of Democracies. Follow Brenda on Twitter @ProfBShaffer. Yael Shaffer is an attorney, LLB., with a practice focusing on consumer protection.