Pacta sunt servanda and exception of non-performance

Legal assistance paper

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Date produced: 19/05/2012

1. What is the principle of ‘pacta sunt servanda’?

2. What is the principle of ‘Exception of non-performance’?

3. What do these two concepts mean in relation to Venezuela’s proposal to annotate the agenda of the ADP with a footnote which would allow for the review of the implementation of Decision 1/CP.17 in accordance with the principle of pacta sunt servanda and, in particular, exception of non-performance in relation to the Convention and the Kyoto Protocol?

Summary:

Pacta sunt servanda is a principle by which treaties are binding upon the parties and obligations must be performed in good faith. The “exception of non-performance” principle (the status of which is uncertain under international law) states if party A does not perform obligation Y which it owes to party B, then party B does not need to perform obligation X which it owes to party A.

It seems that Venezuela is trying to state that if Annex 1 countries do not perform their obligations owed to non-Annex 1 under the Kyoto Protocol, then non-Annex 1 countries do not need to perform their obligations under the Durban Platform (Decision 1/CP.17). Venezuela caveats this exception of non-performance principle with the principle of pacta sunt servanda, so that the reverse does not apply. That is, if non-Annex 1 countries do not perform their obligations under Dec 1/CP.17, then Annex 1 countries are not entitled to withhold performance of their obligations under Kyoto using the exception principle, as the Kyoto Protocol is part of an international treaty and therefore pacta applies, so that parties must perform the treaty obligations in good faith.

It is our view, that this is the outcome that would result in any event. That is, any international treaty must be performed in good faith, and the exception of non-performance (to the extent it exists under international law) would only apply in respect of obligations which are binding under international law. Since COP decisions, generally, do not create legally binding obligations under international law, it is unlikely that the exception of non-performance could be applied in the context of the Convention and/or the Kyoto Protocol on the one hand and Decision 1/CP.17 on the other.

1. Pacta sunt servanda

Pacta sunt servanda is a long-established customary international law principle, by which treaties that have entered into force are binding upon the parties and must be performed by them in good faith. This is enshrined in Article 26 of the 1969 Vienna Convention on the Law of Treaties (VCLT).

Good faith is open-textured. However, it generally includes: (a) acting honestly; (b) not doing acts which reduce the significance of the treaty; (c) compliance with obligations under the treaty (be they of conduct or result); (d) presumption that agreements will not be unreasonable/impossible to perform; (e) genuine interest in resolving any disputes; and (f) meaningful negotiations.

If the treaty is not ratified, but is only signed, Article 26 will not apply, but Article VCLT 18(a) will. This latter provision obliges states not to defeat the object and purpose of a treaty prior to its ratification, acceptance, approval etc. Consequently this is a lower standard of obligation.

2. Exception of non-performance

In general terms, this is the principle that performance of an obligation may be withheld if the other party has itself failed to perform the same or a related obligation. In practical terms, it would apply as follows:

Where State A owes obligation X to State B, and State B owes a similar/related obligation Y to State A, then if State A withholds performance of obligation X, State B is entitled to withhold performance of obligation Y.

However, the status of the principle of exception of non-performance under international law is uncertain. In particular, there are various questions surrounding whether it falls within the realm of the law of state responsibility or law of treaties and the scope of the exception itself. There are also questions about whether or not it is practicable for it to apply to multilateral treaties. These issues are beyond the scope of this note.

3. Implications of the footnote proposed by Venezuela

This is a highly complex area of international law and the advice which follows sets out some preliminary views on the implications of the footnote. However, it would be advisable to engage with Venezuela to understand the context in which it is using the concepts contained in the footnote, as it may have a different view to the points set out below.

The reference to exception of non-performance (assuming it is a principle of international law) would mean, at a high-level, that if an Annex I Party breaches the Convention or the Kyoto Protocol, then non-Annex I Parties would not need to comply with Decision 1/CP.17.

However, this also applies the other way round – i.e. if non-Annex I Parties do not comply with Decision 1/CP.17, Annex I Parties could claim they are entitled to withhold performance of their obligations under the Convention and/or the Kyoto Protocol.

Venezuela’s proposal mitigates this second scenario by requiring adherence to pacta sunt servanda alongside the principle of exception of non-performance. As noted above, this is because pacta sunt servanda applies to treaties only and, not necessarily to COP decisions. Therefore, Venezuela’s argument might be that non-Annex 1 Parties do not have an obligation to perform their duties in good faith as they are inscribed in a COP decision, while Annex 1 Parties do have an obligation to perform duties in good faith because they are inscribed in a Protocol.

However, pacta sunt servanda applies to the obligations of Parties to the Convention and Kyoto Protocol regardless of the presence of the footnote. Furthermore, ‘obligations’ in Decision 1/CP.17 are not legally-binding obligations, so it is difficult to argue that non-performance of the Convention or Kyoto Protocol is similar to non-performance under Decision 1/CP.17. In other words, in our view, the footnote does not change the default position but including it could lead to an extended fight on agenda.

Given the uncertainty over the role and scope of the ‘exception of non-performance’ under international law, there may be alternative implications and interpretations of the footnote. As mentioned above, clarification on this issue should be obtained from Venezuela.

In particular, Venezuela has previously indicated that it viewed the work of the AWG-LCA as leading to a lowering of mitigation ambition and thereby inducing Parties to breach the Kyoto Protocol. In this respect, it viewed the work of the AWG-LCA as a potential ‘circumstance precluding wrongfulness in the context of a breach of the Kyoto Protocol.’ As a consequence, it proposed to add an option to the ‘legal options’ discussions in the AWG-LCA in Durban under the head of ‘exception of non-performance’.

However, in our view, it is not clear how Venezuela intended to link the concept of circumstances precluding wrongfulness (which falls within the realm of the law of state responsibility) and the exception of non-performance. As such, further clarification is required from Venezuela.